Stocks Inch Higher On Soft PPI, 'Magnificent 7' Retest 2021 Record Highs: What's Driving Markets Wednesday?

U.S. stocks trended higher on Wednesday, extending gains in a week marked by two soft inflation reports.

After a surprisingly sharp drop in the Consumer Price Index on Tuesday, a similar trend emerged on Wednesday with the Producer Price Index also declining more than anticipated.

October retail sales data revealed a modest 0.1% decrease for the month, which was more favorable than the projected 0.3% fall.

Traders are nearly fully factoring in the likelihood of the Federal Reserve maintaining steady interest rates in December while anticipating four rate reductions next year.

These adjusted expectations for interest rates have sparked an upsurge in major tech stocks.

The “Magnificent Seven” group, featuring prominent tech giants like Apple Inc. AAPL, Microsoft Corp. MSFT, Alphabet Inc. GOOG GOOGL, Amazon Inc. AMZN, Meta Platforms Inc. META, NVIDIA Corp. NVDA and Tesla, Inc. TSLA, is now revisiting peak levels last observed toward the end of 2021.

On a positive note, the House has approved a temporary spending bill that extends government funding through mid-January.

Chart Of The Day: ‘Magnificent 7’ Tech Giants Revisit Record Peaks

Cues From Wednesday’s Trading:

The S&P 500 rose 0.2%, rising above 4,500 points. Blue-chip stocks in the Dow Jones Industrial Average also traded 0.3% higher, while the tech-heavy Nasdaq 100 slightly underperformed, up 0.1%.

Small caps extended their strong weekly, with the Russell 2000 up 0.8% following a 5.4% gain on Tuesday.

US Index Performance On Wednesday

Wednesday Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.2% higher to $449.64.
• The SPDR Dow Jones Industrial Average ETF DIA rose 0.3% to $349.62.
• The Invesco QQQ Trust QQQ inched 0.1% higher to $385, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Materials Select Sector SPDR Fund XLB was the outperformer, up 0.7% Wednesday.
• The Utilities Select Sector SPDR Fund XLU was the laggard, down 0.3%.

Upcoming Economic Data:

U.S. mortgage applications saw a 2.8% increase in the week ending Nov. 10, extending the previous week’s 2.5% upswing. The average 30-year mortgage rate held steady at 7.61%.

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Stocks In Focus:

• Alcon Inc. ALC fell over 4% following the release of its quarterly results.
• Tesla, Inc. TSLA extended its gains and traded up nearly 2.3% after the company sent out an invite for its Cybertruck launch event.
• Target Corp. TGT rocketed 16% following a strong double beat in quarterly results.
• Other companies reacting to earnings reports include Catalent, Inc. CTLT (up 11%), JD.com, Inc. JD (up about 9%) and  TJX Companies, Inc. TJX (down about 4%).
• Those reporting after the market close include Cisco Systems, Inc. CSCO, J&J Snack Foods Corp. JJSF, Kulicke and Soffa Industries, Inc. KLIC and Sonos, Inc. SONO.

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 1%, with a barrel of WTI-grade crude trading at $77.32. The United States Oil Fund ETF USO was 1% lower to $72.  

Treasury yields were higher, with the 10-year yield up by 10 basis points to 4.55% and the 30-year yield up by 9 basis points to 4.71%. The iShares 20+ Year Treasury Bond ETF TLT was 1.6% lower for the day. 

The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.3%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.3% lower to 1.0842.

European equity indexes closed in the green. The SPDR DJ Euro STOXX 50 Etf  FEZ rose 0.2%. 

Gold eased 0.1% to $1,961/oz. The SPDR Gold Trust GLD was 0.1% lower to $182. Silver rose 1.7% to $23.44, with the iShares Silver Trust SLV up 1.5% to $21.50. Bitcoin BTC/USD was 2.4% higher to $36,410.

Staff writer Piero Cingari updated this report midday Friday. 

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