U.S. Stocks Edge Higher Ahead of Fed's Rate Decision and Commentary

Barry Adams
13 Dec, 2023
New York City

Stocks on Wall Street advanced ahead of the rate decision from the Federal Reserve later in the day.

Benchmark indexes edged higher on the wide belief that the Federal Reserve is set to leave rates unchanged. The Federal Reserve is expected to announce its decision at 2:00 p.m. ET today.

Investors are also looking forward to comments from Federal Reserve Chair Jerome Powell.

Powell is expected to counter the belief that interest rates are near peak levels and that the central bank is preparing to lower rates as early as the first quarter of 2024.

The two latest inflation reports showed a mixed picture on the inflation front. Consumer price inflation in November eased to 3.1%, but the core rate of inflation held steady at 4.0%.

The latest update on producer prices showed that wholesale inflation held steady in November.

Investors also reviewed the persistent decline in energy prices, and crude oil prices extended their weekly decline to the eighth week in a row.

Investors have bid up stocks for the last six consecutive weeks in the belief that interest rates are more likely to decline.

But the Federal Reserve may keep higher rates for longer before strong evidence emerges that inflation is on a sustainable downward path to the Fed's target rate of 2%.

 

Wholesale Inflation Held Steady In November 

The Producer Price Index was unchanged from the previous month in November after adjusting for seasonal factors, the Bureau of Labor Statistics reported Wednesday.

On an unadjusted basis, the producer price index increased 0.9% from a year ago.

Producer Price Index for final demand, less food, energy, and trade services, edged up 0.1% in November from the previous month and rose 2.5% from a year ago.

 

U.S. Indexes and Yields

The S&P 500 index gained 0.2% to 4,651.25, and the Nasdaq Composite increased 0.3% to 14,578.05.

The yield on 2-year Treasury notes decreased to 4.72%, 10-year Treasury notes inched lower to 4.18%, and 30-year Treasury bonds increased to 4.28%.

Crude oil decreased $0.11 to $68.85 a barrel, and natural gas prices fell 0.1 cent to $2.30 a thermal unit.

Gold increased $2.04 to $1,981.42 an ounce ahead of the Fed's rate decision on Wednesday.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged higher to 103.94.

 

U.S. Stock Movers

Tesla declined 1.0% to $234.65 after the electric vehicle maker recalled about 2 million vehicles to fix an Autopilot defect.

Pfizer decreased 7.2% to $26.83 after the pharmaceutical company reported a weaker-than-anticipated 2024 revenue outlook.

Full-year revenue is anticipated to range between $58.5 billion and $61.5 billion, and the company said earnings are likely to be negatively impacted by its recent acquisition of cancer treatment-focused biotech company Seagen.