Wall Street Extended 4-day Rally Ahead of Inflation Report

Barry Adams
12 Sep, 2022
New York City

Stocks advanced on Wall Street on the hopes that the consumer inflation has peaked and economic slowdown may be not as deep as earlier estimated. 

Investors are awaiting the inflation report on Tuesday and retail sales and industrial production data on Thursday, last two major economic reports ahead of the rate setting committee's meeting later in the month. 

The consumer price inflation was 8.5% in July and economists are expecting prices to cool to 8.1% in August after crude oil and transportation costs eased in the month. 

Benchmark indexes opened higher and retained the upward bias after resource led the gainers. 

APA Corp, Devon Energy, Hess Corp, Marathon Oil and Pioneer Natural Resources led the gainers with a rise between 3% and 4%. 

Energy prices rose after the dollar index declined following the largest rate hike in two decades in the eurozone. 

The S&P 500 index increased 1.1% to 4,110.41 and the Nasdaq Composite added 1.3% to 12,266.41. 

With earnings season nearly coming to an end, investors are focused on the possible earnings revisions for the third quarter. 

Energy prices rose after the dollar index declined following the largest rate hike in two decades in the eurozone. 

Crude oil futures increased $1.02 to $87.81 a barrel and natural gas added 37 cents to $8.38 a thermal unit. 

Popular indexes stayed in the positive zone after bond yields eased on the optimism that the inflation data tomorrow may show consumer price inflation is cooling. 

The yield on 12-year Treasury notes declined to 3.57%, 10-year notes edged down to 3.36%, and 30-year bond fell to 3.51%. 

 

European Markets Pull Ahead, Euro Gains 

European markets advanced after investors looked beyond the deepening energy crisis and the hawkish tone of policymakers. 

Resource stocks gained after the dollar weakness lifted the euro and energy prices. 

The euro resumed its advance after the European Central Bank lifted its key lending rate by 75 basis points last week. 

The DAX index jumped 2.4% to 13,402.27, the CAC-40 index 1.95% to 6,333.59, and the FTSE 100 index jumped 1.7% to 7,473.08. 

The euro inched higher to a 3-week high to $1.01 and the British pound edged up to $1.17. 

Brent crude oil added $1.44 to $94.30 but TTF natural gas declined 8% to 190.59 euros a megawatt hour. 

The British economy expanded 0.2% in July from June after falling 0.6% in the previous month, the Office for National Statistics said Monday. 

Service sector led the expansion with a growth of 0.4% offset by the 0.3% decline in production and 0.8% decline in construction. 

Monthly GDP is 1.1% above its pre-coronavirus level in February 2020. 

GDP was flat in the three months to July compared with the previous three months.

Industrial production in Italy gained 0.4% in July from the downwardly revised 2% decline in the previous month, National Institute of Statistics said Monday. 

On a seasonally adjusted and annual basis, production increased 1.4% after falling 1.1% in June. 

U.K. goods trade balance improved in July from June after good exports rose and imports declined. 

Total goods exports rose