Traders work on the floor of the New York Stock exchange during morning trading on November 10, 2023 in New York City.
Michael M. Santiago | Getty Images
U.S. stock futures ticked higher Wednesday, as traders tried to extend a strong rally from the previous session that was sparked by tame inflation data. Wall Street also had its eyes on Washington as lawmakers tried to avoid a government shutdown.
Futures tied to the S&P 500 rose 0.4%. Dow Jones Industrial Average futures climbed 90 points, or 0.3%, while Nasdaq 100 futures also advanced 0.5%.
Late Tuesday, the House of Representatives passed a bill to avert a government shutdown. The measure will go to the Senate for a vote. If cleared by lawmakers, the legislation goes to President Joe Biden. Without a funding bill, the federal government is slated to shut down at the end of the week.
The S&P 500 climbed 1.9%, while the Nasdaq Composite popped about 2.4% higher. It was the best day since April for both indexes. The 30-stock Dow added nearly 490 points, or 1.4%.
These gains came after October’s consumer price index, a key inflation metric, came in lower than the 0.1% increase economists surveyed by Dow Jones had expected. Instead, the CPI came in flat on a monthly basis. Investors celebrated the news, sending stocks soaring on the hopes that the Federal Reserve could finally put an end to its rate-hiking campaign.
“The CPI report did basically everything that the market needed to do, which is to confirm disinflationary trend, cooling economy and ultimately put the final pin in the case for the Fed popping [interest rates] again in December,” said Ross Mayfield, investment strategy analyst at Baird.
Mayfield added that he doesn’t believe the U.S. central bank will cut rates anytime in the near term, since the housing market remains strong at the moment.
“Even a small dip in mortgage rates was enough to provide that pop in mortgage application demand last week, and a fall in long rates spurs mortgage demand and keeps upward pressure on housing prices. I think that’s why they, in theory, want to hold [rates] higher for longer,” he said.
Investors will get more inflation data Wednesday with the release of October’s producer price index reading.
— CNBC’s Chelsey Cox contributed reporting.
