Wall St eyes higher open after soft PPI data, Fed's verdict on tap
Business
Wall St eyes higher open after soft PPI data, Fed's verdict on tap
(Reuters) - U.S. stocks were poised for a higher open on Wednesday as fresh data signaled signs of cooling inflation ahead of the Federal Reserve's final policy decision of the year, where it is widely expected to leave interest rates unchanged.
The Labor Department's report showed the Producer Price Index (PPI) for final demand rose 0.9% on an annual basis in November. Economists polled by Reuters had estimated a 1% advance.
On a month-on-month basis, producer prices were unchanged, against estimates of a 0.1% increase.
The recent slew of reports, including the consumer price index (CPI) data on Tuesday, have cemented expectations that interest rates have peaked, with traders also estimating potential rate cuts next year.
The upbeat sentiment led Wall Street's main indexes to close at fresh 2023 highs on Tuesday.
"The numbers are more or less in line with expectations and continue to show that inflation is headed in the right in the right direction," said Peter Cardillo, chief market economist at Spartan Capital Securities.
All eyes are now on the central bank's interest rate decision at the end of its two-day meeting, due at 2:00 p.m. ET.
Focus will also be on Fed Chair Jerome Powell's comments after the policy announcement and the release of the "dot plot", which could provide a glimpse into monetary policy trajectory.
Money markets have almost fully priced in the Fed holding rates at the current level of 5.25%-5.50% later in the day. Traders now see possible monetary easing next year, estimating a nearly 79% chance of at least a 25-basis-point rate cut in May 2024, according to the CME's FedWatch tool.
