Wall Street Gains on Positive Wholesale Inflation Report

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Wall Street Gains on Positive Wholesale Inflation Report/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Wall Street edged higher Tuesday after a report showed wholesale inflation rose less than expected in December, boosting investor optimism. The S&P 500 gained 0.5%, the Dow added 164 points, and the Nasdaq rose 0.7%. Treasury yields held steady, and investors await Wednesday’s consumer inflation report for further insights.

Traders work on the floor at the New York Stock Exchange in New York’s Financial District Thursday, Jan. 2, 2025. (AP Photo/Seth Wenig)

Stock Market Update: Quick Looks

Indexes: S&P 500 (+0.5%), Dow (+0.4%), Nasdaq (+0.7%).
Inflation: Wholesale prices rose less than forecast, calming fears of prolonged Fed rate hikes.
Treasury Yields: Held steady; 10-year yield at 4.78%, 2-year yield at 4.36%.
Stock Movers: KB Home (+9.5%) on strong earnings; Signet Jewelers (-16.5%) after weak holiday sales.
Global Markets: Mixed performance; China stocks climbed, Japan’s Nikkei fell 1.8%.

Wall Street Gains on Positive Wholesale Inflation Report

Deep Look:

Encouraging Inflation Data Lifts Wall Street

Stocks opened higher Tuesday following a report showing that U.S. wholesale inflation rose less than expected in December. The producer price index (PPI), which measures inflation at the wholesale level, increased 0.2% for the month, compared to a 0.4% rise in November.

The softer PPI data comes ahead of Wednesday’s consumer price index (CPI) report, which is expected to provide more clarity on inflation trends. Economists surveyed by FactSet predict CPI rose 0.3% in December and 2.8% year-over-year.

Fed Policy in Focus

Investors are closely watching inflation data as it shapes expectations for Federal Reserve policy. Although the Fed has hinted at two rate cuts in 2025, down from its earlier projection of four, speculation persists that it may hold rates steady for the year if inflation remains stubbornly high.

Treasury yields, a key barometer for interest rate expectations, have surged in recent months, pressuring the stock market. On Tuesday, yields held steady following the PPI report:

10-Year Treasury Yield: Unchanged at 4.78%, up from 3.65% in September.
2-Year Treasury Yield: Eased to 4.36% from 4.39%.

Market Movers

KB Home (+9.5%): Shares surged after the homebuilder posted better-than-expected earnings and revenue. CEO Jeffrey Mezger credited faster build times and improving housing market conditions despite higher mortgage rates.
Signet Jewelers (-16.5%): The diamond retailer tumbled after reporting disappointing holiday sales, with shoppers opting for lower-priced items amid a competitive retail environment.

Global Market Performance

Markets abroad showed mixed results:

Asia: Japan’s Nikkei 225 fell 1.8% after a holiday, while Hong Kong (+1.8%) and Shanghai (+2.5%) gained on optimism about China’s economic prospects.
Europe: Stock indexes were mixed, reflecting cautious investor sentiment ahead of the U.S. CPI report.