Wall St staggers to higher close as Fed rate hike nears

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  • The market sees a 22% probability of a 100 bps rate hike from the Fed -CME
  • Railway shares fall amid negotiations to avoid strikes
  • Indexes up: Dow 0.10%, S&P 0.34%, Nasdaq 0.74%

NEW YORK, Sept 14 (Reuters) – Wall Street ended a directionless session higher on Wednesday as a target inflation report largely stemmed the flow of Tuesday’s selloff and investors hit the “pause” button.

All three indices faltered throughout the day, but eventually ended in positive territory. All failed to regain the ground lost in Tuesday’s carnage, which caused their biggest percentage plunge in more than two years.

“Today is a lick day, after taking body blows yesterday,” said Ryan Detrick, marketing strategist at the Carson Group in Omaha, Nebraska. “It’s a day of rest, and that’s a bit of a welcome sign.”

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The Labor Department’s producer prices (PPI) data landed near consensus estimates and provided some relief in the wake of Tuesday’s market-rattling CPI print, which was warmer than expected. read more

“The inflation debate continues and yesterday was a stark reminder that this is a tough fight and that the Fed must remain aggressive in putting a lid on the widespread inflation rates we are seeing,” Detrick added.

The PPI report provided reassurance that inflation is indeed on a slow, downward path.


But it still has a long way to go before it approaches the Federal Reserve’s average annual inflation target of 2%, and while financial markets have fully priced in a rate hike of at least 75 basis points by the conclusion of the FOMC’s policy meeting next week, they see a 22% probability for a super-sized increase of 100 basis points, according to CME’s FedWatch tool.

Two-year US Treasury yields, which reflect interest rate expectations, extended Tuesday’s rise.

The size and duration of further rate hikes ahead has many market observers worried about the lingering effects of the Fed’s tightening phase, with some seeing a recession as inevitable.

A trader works on the trading floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., September 13, 2022. REUTERS/Andrew Kelly

The transportation sector ( .DJT ), seen as a barometer of economic health and providing a glimpse into the supply side of the inflation picture, was weighed down by railroad stocks in the face of a potential strike.

“Does the White House really want the rails to shut down and affect supply chains even more, less than two months before the midterm elections?” Detrick asked. “We are optimistic that they can keep the rails open.”

Railroad operators Union Pacific ( UNP.N ), Norfolk Southern ( NSC.N ) and CSX Corp ( CSX.O ) lost 3.7%, 2.2% and 1.0%, respectively, even as Labor Secretary Marty Walsh met with union representatives in Washington in talks aimed at preventing a rail shutdown. read more

The Dow Jones Industrial Average (.DJI) rose 30.12 points, or 0.1%, to 31,135.09, the S&P 500 (.SPX) gained 13.32 points, or 0.34%, to 3,946.01 and Nasdaq Composite (.IXIC)0 points, 8.IXIC. 0.74% to 11,719.68.

Six of the 11 major sectors in the S&P 500 advanced, with energy stocks (.SPNY) leading the gainers helped by rising crude oil prices on supply concerns.

Starbucks Corp ( SBUX.O ) shares jumped 5.5% after the company raised its three-year profit and sales outlook. read more

Tesla Inc ( TSLA.O ) bounced back from Tuesday’s slide, rising 3.6% on the day President Joe Biden announced $900 million in funding for electric vehicle charging stations. read more

Advances outnumbered decliners on the NYSE by a ratio of 1.05 to 1; on the Nasdaq, a 1.06 to 1 ratio favored decliners.

S&P 500 posted 2 new 52-week highs and 30 new lows; The Nasdaq Composite recorded 26 new highs and 219 new lows.

Volume on US exchanges was 10.90 billion shares, compared to the average of 10.33 billion over the past 20 trading days.

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Reporting by Stephen Culp in New York Additional reporting by Ankika Biswas, Devik Jain and Sruthi Shankar in Bangalore Editing by Matthew Lewis

Our standards: Thomson Reuters Trust Principles.

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