US open: Stocks build on gains as PPI and CPI inflation both ease

US stocks were making further gains on Wednesday as investors continued to show optimism that rate hikes might be over, as both consumer and producer price inflation slowed more than expected in October.

The Dow Jones Industrial Average, S&P 500 and Nasdaq were all 0.3% higher by 1018 ET.

On Tuesday, the S&P 500 and Nasdaq put in their best daily performances in April after the consumer price index rose by just 3.2% year-on-year last month, down from 3.7% in September. Core inflation, which excludes food and energy, unexpectedly declined to 4% from 4.1% previously.

Wednesday morning's data revealed that the producer price index for October rose by just 1.3% year-on-year, down from 2.2% the month before and well below the 1.9% expected. Core PPI eased to an annual rate of 2.4% from 2.7%.

Following on from the well-received CPI figures, US economist Matthew Martin from Oxford Economics said the PPI reading offers "more encouraging news for the Fed".

"The Fed was always likely to look passed the volatility in the energy markets, so the moderation in core prices will be the more relevant to their policy rate decisions and supports their case to hold rates steady," Martin said.

In other economic news, US retail sales fell by 0.1% in October after a revised 0.9% gain in September. This was the first monthly decline since March but not as bad as the 0.3% decline expected by the market. When excluding auto sales, core sales unexpectedly increased by 0.1%.

Meanwhile, the NY Empire State manufacturing index surged to +9.1 in November – its highest level since April. This was up from -4.6 the previous month and well ahead of the -2.8 reading expected.

Bonds gained following the data, with 10-year US Treasury yields increasing 8.9 basis points to 4.534%.

Target impresses, TJX underwhelms

Target shares surged nearly 18% after the big box retailer comfortably beat quarterly profit forecasts. The Minneapolis-based firm said sales in the three months to 28 October were $25bn, down 4.3% on the same quarter a year previously, but adjusted earnings per share were $2.10, up 36% and above the high end of the retailer’s guidance range.

Sector peer TJX Companies saw shares drop 4% despite beating forecasts with quarterly profits as the retail conglomerate disappointed with full-year earnings guidance. Both revenues and profits were ahead of internal and external targets, though full-year diluted earnings per share estimates of $3.71-3.74 came in short of expectations.

General Motors declined on the back of reports that UAW workers at its factories have voted against a proposed labour pact.

TransUnion shares were rising after the credit reporting agency announced plans to cut 1,300 jobs in a cost-cutting programme.