NEW YORK (AP) — Wall Street is rising Wednesday after recent signals suggest inflation pressures may be easing.
The S&P 500 rose 0.4% in early trading, nearing its highest level in 20 months. The Dow Jones Industrial Average rose 95 points, or 0.3%, to 36,220 at 9:45 a.m. Eastern time, closing in on its record high of just under 36,780. The Nasdaq Composite rose 0.3%.
Homebuilder Toll Brothers added to the market leadership with a 3.9% gain after reporting higher profits than analysts expected for the latest quarter. Buyer demand has also remained solid so far in the current quarter, which is due, among other things, to slightly cheaper mortgage interest rates.
Mortgage rates have fallen as Treasury yields have fallen on hopes that the Federal Reserve might finally end its flurry of rate hikes to control high inflation. Wall Street expects the Fed’s next move will be to cut interest rates, possibly as early as March, which would boost the economy and financial markets.
More reports came Wednesday that suggested the Federal Reserve may keep interest rates steady, at least for now. The next interest rate meeting is in a week and the key interest rate is widely expected to remain at its highest level in more than two decades.
Private employers added fewer jobs last month than economists expected, according to a report. While no one on Wall Street wants mass layoffs, a slowdown in the labor market could remove upward pressure on inflation.
A more comprehensive labor market report from the US government will be released on Friday, which could cause major fluctuations on Wall Street.
“What we don’t know is how much markets have already priced in a slowing labor market or how they will react if Friday’s data turns out to be stronger than expected,” said Chris Larkin, managing director of trading and investing at E-Trade Morgan Stanley.
A separate report Wednesday said U.S. companies increased the amount of production they produced over the summer by more than the total number of hours worked by their employees. This stronger-than-expected productivity growth more than offset worker wage increases and could also dampen inflationary pressures.
Treasury yields in the bond market were generally lower following the economic reports, with the 10-year yield falling to 4.15% from 4.17% late Tuesday. It was over 5% in October and at its highest level since 2007.
The decline eases pressure on all types of investments, especially those that are considered the most expensive or force their investors to wait the longest for big growth.
This is particularly true for large technology stocks. Nvidia is now up nearly 220% year to date, after gaining another 0.4% on Wednesday.
Campbell Soup was another winner, rising 5.6% after the company reported higher-than-expected profit for its latest quarter.
On the losing side of Wall Street was Brown-Forman, the company whose brands include Jack Daniels whiskey. It fell 9.7% after earnings were weaker than analysts had forecast. In addition, the forecast for full-year sales growth was lowered.
There could also be disappointment on Wall Street if interest rate cuts do not occur as quickly as hoped. While Federal Reserve officials have suggested that their key interest rate may actually have peaked, some said it is still too early to think about when rate cuts might come.
The stock markets abroad were mostly in positive territory. Japan’s Nikkei 225 rose 2% after a senior central bank official reiterated that the Bank of Japan would keep monetary policy accommodative until inflation reached stable levels.
Growth was more modest in the rest of Asia and Europe.
AP business reporters Matt Ott and Elaine Kurtenbach contributed.
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