U.S. stocks edge higher as focus pivots from hot inflation to corporate earnings

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Wall Street was off to a modestly higher start Thursday, one day after a landmark consumer inflation reading as investors braced for a wave of corporate earnings reports.

What are major indexes doing?
  • The Dow Jones Industrial Average
    DJIA,
    +0.37%
    rose 135.48 points, or 0.4%, to 36,425.80.

  • The S&P 500
    SPX,
    +0.26%
    was up 12.73 points, or 0.3%, at 4,739.08.

  • The Nasdaq Composite
    COMP,
    +0.33%
    gained 59.43 points, or 0.4%, to 15,247.82, aiming for a fourth straight gain.

On Wednesday, major indexes gained ground after the December consumer-price index showed U.S. inflation running at a 7% year-over-year clip, a nearly 40-year high.

What’s driving markets?

Peter Garnry, head of equity strategy at Saxo Bank, said the market is expecting inflation to recede in 2022, but the dilemma facing traders is the uncertainty by how much will prices cool.

“U.S. equities are now firmly in a trading range, and we believe it will require significant surprises on earnings (either way) or a breakout in the U.S. 10-year yield
TMUBMUSD10Y,
1.732%
to take U.S. equities out of the trading range,” he said.

The U.S. corporate earnings reporting season starts to speed up on Friday with major banks including JPMorgan Chase
JPM,
+0.55%
due to report results.

See: JPMorgan, Goldman profit updates may shape bank stock rally

U.S. stock-index futures got a modest lift Thursday after the December producer-price index showed inflation at the wholesale level rose 9.7% year over year, down form 9.8% in November. The monthly rise of 0.2% was the lowest in 13 months. Also, first-time jobless claims rose by 23,000 to 230,000 last week.

Meanwhile Federal Reserve Gov. Lael Brainard will be testifying as part of her nomination hearing to become the vice chair of the institution.

“Our monetary policy is focused on getting inflation back down to 2% while sustaining a recovery that includes everyone,” Brainard said in prepared testimony set to be delivered before the Senate Banking Committee. “This is our most important task.”

Which companies are in focus?
  • Shares of Delta Air Lines Inc.
    DAL,
    +3.05%
    rose 0.3% after the air carrier reported fourth-quarter adjusted profit and revenue that beat expectations.

  • KB Home
    KBH,
    +13.43%
    shares jumped 15%, after the home builder reported fourth-quarter profit above expectations and sales that matched forecasts, saying it had to meet “healthy demand” for housing amid “extremely challenging” operating conditions.

What are other assets doing?
  • The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    1.732%
    rose 0.3 basis point to 1.726%. Yields and debt prices move opposite each other.

  • The ICE U.S. Dollar Index
    DXY,
    -0.25%,
    a measure of the currency against a basket of six major rivals, was down 0.2%, contributing to a 1% pullback so far this week.

  • Oil futures
    CL00,
    +0.10%
    were little changed after ending Wednesday at a two-month high, while gold futures
    GC00,
    -0.42%
    edged down 0.3%.

  • Bitcoin
    BTCUSD,
    +0.58%
    rose 0.7%.

  • In European equities, the Stoxx Europe 600
    SXXP,
    +0.06%
    rose 0.1%, while London’s FTSE 100
    UKX,
    +0.04%
    was little changed.

  • In Asia, the Shanghai Composite
    SHCOMP,
    -1.17%
    fell 1.2%, while the Hang Seng Index
    HSI,
    +0.11%
    rose 0.1% in Hong Kong and Japan’s Nikkei 225
    NIK,
    -0.96%
    lost 1%.

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