US stocks open higher as inflation fears ease, Fed minutes in focus

Wall Street’s main indices opened higher on Wednesday as US Treasury yields continued to retreat, while investors assessed the latest inflation data and awaited minutes from the Federal Reserve’s last policy meeting.

Producer prices rise less than expected in September

The Labor Department reported that the producer price index for final demand increased 0.5% last month compared with estimates of a 0.3% increase, ahead of Thursday’s closely watched consumer inflation data. The core figure, which excludes volatile food and energy components, rose 0.3% month-on-month versus estimates of a 0.2% increase.

US stocks

The annual rate of producer inflation eased slightly to 8.6% in September from a record high of 8.7% in August, while the core rate dipped to 6.8% from 6.9%. The report suggested that some of the inflationary pressures at the producer level may be starting to moderate, easing concerns that high inflation could force the Fed to tighten monetary policy sooner than expected.

Fed minutes to shed light on tapering timeline

Minutes from the Fed’s September meeting, where policymakers held rates steady and signaled that they could start scaling back their massive bond-buying program as soon as November, are expected at 2 p.m. ET and would be crucial in assessing the central bank’s outlook on interest rates and inflation.

Yields on government bonds have eased from their multi-year highs on dovish remarks from Fed officials earlier this week. However, Fed Governor Michelle Bowman on Wednesday repeated her view that despite “some progress” on inflation, the U.S. central bank will probably need to tighten monetary policy further to restore price stability.

Central bank officials such as Fed Governor Christopher Waller, Atlanta Fed President Raphael Bostic and Boston Fed President Susan Collins are also scheduled to speak on Wednesday.

Exxon to buy shale rival Pioneer for nearly $60 bln

In corporate news, Exxon Mobil announced that it would buy shale oil and gas producer Pioneer Natural Resources for nearly $60 billion in an all-stock deal, creating the largest U.S. oil producer by output. The deal, which is expected to close in the first half of 2023, would boost Exxon’s production by about 25% and its proved reserves by about 30%.

Exxon shares fell 0.4% in early trading, while Pioneer shares jumped 9.4%.

Market snapshot

At 10:15 a.m. ET, the Dow Jones Industrial Average rose 82.90 points, or 0.25%, to 33,822.20. The S&P 500 opened higher by 8.35 points, or 0.19%, at 4,366.59, while the Nasdaq Composite gained 56.37 points, or 0.42%, to 13,619.21.

The S&P 500 energy sector was the best performer among the 11 major sectors, rising 1.4%, followed by materials and industrials. The S&P 500 technology sector was up 0.4%, while the communication services sector was down 0.2%.

Among other movers, Netflix shares rose 1.7% after Goldman Sachs raised its price target on the streaming giant ahead of its quarterly results next week.

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