(Bloomberg) — Stocks rose after a smaller-than-expected gain in producer prices suggested that inflation pressures are showing signs of moderation.
The S&P 500 advanced for a third straight day, while the dollar retreated. Chipmakers rallied after Taiwan Semiconductor Manufacturing Co. raised its growth projections and unveiled record spending plans for 2022. Delta Air Lines Inc. gained after saying the omicron coronavirus variant won’t derail the carrier’s expectation to remain profitable for the rest of the year.
Prices paid to U.S. producers decelerated in December as two key drivers of inflation in 2021 — food and energy — declined from a month earlier, representing a respite in the recent trend of sizable increases. At the same time, producers continue to face a variety of materials shortages, limited labor supply and transportation bottlenecks that sent prices soaring last year.
“Investors are looking for signs of moderation in supply-chain disruptions as declining input costs would ultimately signal an easing of the consumer’s price burdens,” said John Lynch, chief investment officer for Comerica Wealth Management. “This could help clarify the extent of the Fed’s mission to raise rates in 2022 and beyond.”
In remarks prepared for a confirmation hearing before the Senate Banking Committee, Federal Reserve Governor Lael Brainard said tackling inflation and getting it back down to 2% while sustaining an inclusive recovery is the “most important task.” Fed Bank of Philadelphia President Patrick Harker joined the widespread calls by his colleagues for higher rates, saying he favors a March liftoff and three or four hikes for 2022.
Read: U.S. Initial Jobless Claims Rose to Highest Since Mid-November
Morgan Stanley clients expect financial stocks to outperform this year, according to a survey at its annual conference this week. The poll shows that 45% of respondents bet the industry will be the best performer in 2022. That’s the highest share of the votes for the sector since 2015, the firm said in a note Thursday.
Here are some key events this week:
- Bank of Korea policy decision and briefing on Friday.
- Wells Fargo, Citigroup, JPMorgan due to report earnings on Friday.
- U.S. business inventories, industrial production, University of Michigan consumer sentiment, retail sales on Friday.
- New York Fed President John Williams speaks Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.2% as of 9:55 a.m. New York time
- The Nasdaq 100 rose 0.3%
- The Dow Jones Industrial Average rose 0.3%
- The Stoxx Europe 600 rose 0.1%
- The MSCI World index rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.3% to $1.1478
- The British pound rose 0.3% to $1.3744
- The Japanese yen rose 0.3% to 114.25 per dollar
Bonds
- The yield on 10-year Treasuries was little changed at 1.73%
- Germany’s 10-year yield declined two basis points to -0.08%
- Britain’s 10-year yield declined two basis points to 1.12%
Commodities
- West Texas Intermediate crude rose 0.2% to $82.79 a barrel
- Gold futures fell 0.4% to $1,819.80 an ounce
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