US close: Stocks manage gains as wholesale prices shrink

By Sharecast News

Sharecast News | 15 Nov, 2023

Updated : 22:27

16:00 22/11/24

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US stock markets closed with slight gains on Wednesday, driven by growing investor optimism that the era of rate hikes may be drawing to a close.

The sentiment was fuelled by recent data indicating a slowdown in October’s consumer and producer price inflation.

At the close, the Dow Jones Industrial Average was up 0.47% at 34,991.21 points.

Similarly, the S&P 500 edged up by 0.16%, closing at 4,502.88, while the Nasdaq Composite posted a modest gain of 0.07%, ending the day at 14,103.84.

In currency markets, the dollar was last up 0.01% on sterling at 80.55p, while it slipped 0.01% against the euro to 92.18 euro cents and declined 0.04% on the yen to change hands at JPY 151.30.

“Better US PPI and retail sales figures have piled on the good news, helping equities around the globe to extend their gains,” said IG chief market analyst Chris Beauchamp earlier.

“Investors continue to rejoice in the hope of no more Fed rate hikes, with UK traders cheered by this morning’s CPI drop, too.

“Overall the skies have cleared dramatically for markets, and hopes of a soft landing and improved earnings have driven flows back into stocks.”

Wholesale prices take a surprise dip in October

In economic news, the Department of Labor reported earlier that wholesale prices took an unexpected dip in October.

The data, adjusted for seasonal factors, revealed a 0.5% decrease in producer prices, surpassing the consensus expectation of a 0.1% decline.

Furthermore, September’s initial increase of 0.4% was revised down by two-tenths of a percentage point.

The decline in wholesale prices was primarily driven by a significant 1.4% drop in so-called final demand prices for goods compared to September.

That decline was led by a sharp 6.5% reduction in energy prices.

In contrast, final demand services prices remained unchanged, but trade prices, which include retailers’ margins, fell by 0.7%.

Elsewhere, consumer spending in the US demonstrated resilience in October.

According to seasonally-adjusted data from the Department of Commerce, retail sales volumes only saw a minor dip of 0.1% month-on-month, reaching $705bn.

Economists had anticipated a more significant decline of 0.3%.

Additionally, September’s initial increase of 0.9% was revised up by two-tenths of a percentage point.

Breaking down the retail sales data, sales of automobiles and parts experienced a 1.0% decline, while sales excluding automobiles and parts showed a modest increase of 0.1%.

The furniture and home furnishing stores segment faced a more substantial decrease of 2.0% during the month.

In contrast, non-store retailers saw a 0.2% increase, and sales at food services and drinking places rose by 0.3%.

Target surges while TJ Maxx owner sinks

In equity markets, Target Corporation surged 17.81% in the wake of a strong performance from the big-box retailer, which comfortably surpassed quarterly profit forecasts.

Target reported sales of $25bn for the three months ended 28 October, marking a 4.3% decrease from the same period last year.

Its adjusted earnings per share reached $2.10, a remarkable 36% increase and exceeding the high end of the retailer’s guidance range.

Another notable gainer was credit reporting agency TransUnion, which climbed 2.43% after it announced plans to implement a cost-cutting programme involving the axing of 1,300 jobs.

On the downside, off-price retailer TJX Companies fell 3.32% despite beating quarterly profit forecasts and reporting solid revenues and profits that exceeded both internal and external targets.

Investor sentiment soured, however, on disappointing full-year earnings guidance, with the company’s estimated full-year diluted earnings per share of $3.71 to $3.74 falling short of market expectations.

General Motors saw a minor dip of 0.21% after reports that members of the United Auto Workers (UAW) union at its factories had voted against a proposed labour pact.

Reporting by Josh White for Sharecast.com.

Dow Jones - Risers

Walt Disney Co. (DIS) $93.93 3.14%
Intel Corp. (INTC) $40.61 3.04%
Walgreens Boots Alliance, Inc. (WBA) $21.56 2.23%
Nike Inc. (NKE) $107.78 1.96%
3M Co. (MMM) $96.82 1.95%
American Express Co. (AXP) $159.17 1.61%
Home Depot Inc. (HD) $308.19 1.50%
International Business Machines Corporation (CDI) (IBM) $152.48 1.44%
Caterpillar Inc. (CAT) $251.25 1.30%
Walmart Inc. (WMT) $169.78 1.27%