Wall Street Opens up as PPI Gives Hope of Turn in Prices Trend; Dow up 100 Pts

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Investing.com — U.S. stock markets opened higher on Thursday after producer prices data for December encouraged hopes that the trend in inflation may be starting to turn.

By 9:45 AM ET (1445 GMT), the Dow Jones Industrial Average was up 107 points, or 0.3%, at 36,397 points. The S&P 500 was up 0.2% and the Nasdaq Composite was up 0.3%. 

Earlier, official figures for December showed that producers had raised their prices by less than feared in the final month of the year, December’s 0.2% increase being the smallest monthly gain since November 2020.  Even so, Oxford Economics analyst warned that it’s too early to claim victory over inflation.

“Persistent supply disruptions will pin producer prices near record levels in the near term, especially given a rapidly spreading Omicron variant that will fan inflation pressures,” Rasheed said in a note to clients. “The PPI data adds to a growing body of evidence that the Fed will commence rate lift off in March and undergo balance sheet reduction mid-year.”

High disposable income, supported by windfall profits on financial assets and by fiscal transfers, has led to surging demand across many sectors, allowing companies to increase their prices markedly over the last two years. Two examples illustrated that trend in sharp focus in early trading, with Taiwan Semiconductor Manufacturing (NYSE:TSM) stock rising by 8.4% after it reported another record quarter for sales and better-than-expected profit. The company’s result and bullish outlook indicate that the squeeze on silicon chips, a defining market trend of 2021, isn’t set to ease up much in the near term. 

Elsewhere, Lennar (NYSE:LEN) stock rose 3.0% after the home builder raised its annual dividend by 50%, reflecting the windfall it has enjoyed from a surge in demand for housing with more space for working and exercising since the pandemic started.