Wall Street rides on optimism ahead of inflation report

  • Airlines win as US flights slowly resume after FAA outage
  • Bed Bath & Beyond Prolongs Gains
  • Indices up: Dow 0.6%, S&P 500 0.9%, Nasdaq 1.3%

NEW YORK, Jan 11 (Reuters) – U.S. stocks rose on Wednesday afternoon, led by Nasdaq gains as investors were bullish ahead of an inflation report that could give the Federal Reserve room to come back on its aggressive interest rate hikes.

According to projections by economists polled by Reuters, the much-anticipated report due Thursday is expected to show that consumer prices in the United States probably rose 6.5% year-on-year in December, compared with a 7.1% increase in november.

Most S&P 500 sectors were up, with real estate (.SPLRCR) rising the most, followed by consumer discretionary (.SPLRCD).

Stocks have risen in recent sessions, helped by hopes that the Fed may soon pause its cycle of rate hikes, although comments from some Fed officials have supported the view that the central bank must stay aggressive in raising interest rates to fight inflation.

“Investors expect us to be closer to a break than at any time last year,” said Jake Dollarhide, managing director of Longbow Asset Management in Tulsa, Oklahoma. He said it would be well received by the market.

The Dow Jones Industrial Average (.DJI) rose 196.99 points, or 0.58%, to 33,901.09, the S&P 500 (.SPX) gained 36.81 points, or 0.94%, to 3,956.06 and the Nasdaq Composite (.IXIC) added 136.19 points, or 1.27%, to 10,878.82.

Money market participants see a 75% chance that the Fed will raise the benchmark rate by 25 basis points in February.

This week also marks the start of the fourth quarter earnings season for S&P 500 companies, with overall S&P 500 earnings expected to decline year over year.

Wall Street’s biggest banks, which kick off the season later this week, are expected to report lower quarterly earnings amid recessionary risks due to tighter monetary policy.

Retailer Bed Bath & Beyond Inc (BBBY.O) surged despite dismal quarterly results, with some investors speculating it could be a potential acquisition target.

Shares of airlines such as American Airlines Group Inc (AAL.O) and Spirit Airlines Inc (SAVE.N) were higher. US flights were slowly beginning to resume departures and a ground shutdown was lifted after the Federal Aviation Administration rushed to fix a system outage overnight.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 3.34 to 1; on the Nasdaq, a ratio of 2.13 to 1 favored advancers.

The S&P 500 posted 11 new 52-week highs and 1 new low; the Nasdaq Composite recorded 78 new highs and 16 new lows.

Reporting by Caroline Valetkevitch; Additional reporting by Shubham Batra and Amruta Khandekar in Bengaluru; Editing by Shounak Dasgupta and Grant McCool

Our standards: The Thomson Reuters Trust Principles.

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