US open: Stocks on the up as producer price data show favourable trends

dl pepsico pepsi cola soft drinks snack foods manufacturer delivery lorry truck pd — PepsiCoSharecast / public domain image

Stocks on Wall Street began Wednesday trading on the front foot following the release of a slightly stronger-than-expected reading for US wholesale prices, although economists said that behind all the noise the details were more benign.

At 1501 BST, the Dow Jones Industrial Average was up by 0.49% or 141.15 points to 29,382.40, while the S&P 500 was ahead by 0.36% or 13.05 points to 3,598.91 and the Nasdaq Composite was 0.26% firmer at 10,458.75.

In parallel, the yield on the benchmark 10-year US Treasury note was drifting lower by one basis point to 3.936%, the US dollar spot index was little changed and West Texas Intermediate crude oil futures had slipped by 1.31% to $88.04 a barrel on the ICE.

The annual rate of increase in so-called final demand prices in the US dipped from the 8.7% clip observed in August to 8.5% for August (consensus: 8.4%).

Commenting on the latest inflation figures, Ian Shepherdson, chief economist at Pantheon Macroeconomics, pointed out how core goods price were flat on the month - the lowest reading since May 2020 - and although in annual terms inflation remained "elevated", it had come down and he expected that trend to extend in the last three months of the year.

On the services side of the equation, it was just a matter of time before gross margins at non-fuel retailers or "trade services" prices began to fall outright, he added.

Still ahead for later in the session, at 1900 BST the US central bank was scheduled to release the minutes of its 21-22 September Federal Open Market Committee meeting.

CMC Markets analyst Michael Hewson said: "What today’s minutes might do is offer an insight into whether there is any unease among some Fed policymakers as to the side effects the Fed’s current policy stance is having more globally.

"It was something that Fed governor Lael Brainard briefly alluded to earlier this week,and would be interesting to see whether these concerns were more widespread.

"There is already evidence that inflation is starting to fall back of its own accord, as lower demand prompts a tempering of prices, although core prices are proving to be slightly stickier. To date there has been little acknowledgement of the effect the surging US dollar might be having as well, particularly when it comes to the effects on US companies, and their profitability."

Speaking to CNBC overnight, US Treasury chief, Janet Yellen, said that "a market determined value of the dollar is in America's interest [...] the currency movements are a logical outcome of different policy stances."

In corporate news, PepsiCo shares were higher as the drinks-maker lifted its forecasts for the year and posted better-than-expected earnings and revenue for the third quarter.

Dow Jones - Risers

Coca-Cola Co. (KO) $55.58 2.01%
Unitedhealth Group Inc. (UNH) $504.78 0.99%
JP Morgan Chase & Co. (JPM) $102.91 0.93%
Walmart Inc. (WMT) $133.85 0.89%
Johnson & Johnson (JNJ) $164.16 0.88%
Procter & Gamble Co. (PG) $125.08 0.68%
Apple Inc. (AAPL) $139.82 0.60%
McDonald's Corp. (MCD) $238.07 0.43%
Microsoft Corp. (MSFT) $226.37 0.43%
3M Co. (MMM) $109.30 0.42%