Futures on Wall Street edged higher Tuesday and bond yields slipped following new government data showing that the hottest inflation in decades continues to ease.
Prices at the wholesale level rose 8% in October from 12 months earlier, the fourth straight decline, the U.S. reported. The report follows last week's data showing that consumer prices eased more than economists expected in October and that propelled markets to their best week since summer.
The latest data gave stock futures a push higher. Futures for the benchmark S&P 500 rose 2% and the Dow Jones industrials climbed 1.2%.
“Equity markets are looking slightly positive,” said Craig Erlam of Oanda in a report. The rally of the past few weeks is “perhaps slowing a little,” he said, but “there doesn’t appear to be much appetite at this stage to bail on it.”
Wall Street is closely watching inflation data that could impact how much the Federal Reserve raises interest rates at its December meeting. Producer price data is not typically a market mover, but with an intense focus on any information that might suggest what the Fed will do next, Tuesday's report sent U.S. futures to session highs.
The yield on the two-year Treasury, which follows action from the Fed, fell to 4.32% from 4.37% just before the latest inflation data was released. The 10-year Treasury, which influences mortgage rates, fell to 3.79% from 3.83% just before the report's release.
Investors worry this year’s repeated interest rate increases by central banks to cool inflation that is near multi-decade highs might tip the global economy into recession.
Traders expected the Fed to raise its benchmark lending rate again at its December but by a smaller margin of one-half percentage point after four hikes of 0.75 percentage points. Fed officials say rates might have to stay elevated for an extended time to cool prices.
Walmart jumped nearly 7% before the bell after the retail giant announced earnings and a plan to settle lawsuits filed by state and local governments over the toll of powerful prescription opioids sold at its pharmacies with state and local governments across the U.S.
The $3.1 billion proposal follows similar announcements earlier this month from the two largest U.S. pharmacy chains, CVS Health and Walgreen Co., which each said they would pay about $5 billion.
The deals are the product of negotiations with a group of state attorneys general, but they are not final.
Home Depot fell about 2% in premarket despite a very strong third quarter after it affirmed expectations that sales would grow about 3% for the year, which is weaker than most analysts have projected.
Presidents Joe Biden and Xi Jinping met during a summit of the Group of 20 major economies in Indonesia on Monday. That fed hopes for an easing of U.S.-Chinese tension over security, trade, technology and human rights.
The meeting was “surprisingly positive,” Robert Carnell and Nicholas Mapa of ING said in a report.
The FTSE in London fell 0.2% and Frankfurt's DAX rose 0.5%, while the CAC 40 in Paris added 0.8%.
In Asia, the Shanghai Composite Index rose 1.6% to 3,134.07 after Chinese consumer spending contracted by 0.5% in October compared with a year ago under pressure from anti-virus controls. Growth in factory activity also weakened.
The performance was worse than expected by forecasters who say Chinese economic activity will cool as interest rate hikes by global central banks depress demand for exports.
The Hang Seng in Hong Kong advanced 4.1% to 18,343.12 and the Nikkei 225 in Tokyo gained 0.1% to 27,990.17.
Seoul's Kospi was up 0.2% at 2,480.33 while Sydney's S&P-ASX 200 shed less than 0.1% to 7,141.60.
India's Sensex opened lost less than 0.1% to 61,559.08. New Zealand and Southeast Asian markets advanced.
In energy markets, benchmark U.S. crude lost 66 cents to $85.21 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $3.09 to $85.87 on Monday. Brent crude, the price basis for international oil trading, shed 54 cents to $92.60 per barrel in London. It fell $2.85 the previous session to $93.14.
The dollar edged down to 139.36 yen from Monday's 139.92 yen. The euro gained to $1.0404 from $1.0353.
On Wednesday, the U.S. government gives an update on retail spending. Economists say growth likely revived to 0.9% in October from the previous month’s flat performance.
On Monday, the Dow lost 0.6% and the Nasdaq composite fell 1.1%.
McDonald reported from Beijing; Ott reported from Washington.