US STOCKS-Wall St rallies to higher close as inflation data feeds Fed pause hopes

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13/04/2023 21:00

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        * 
      U.S. weekly jobless claims increase
    

        * 
      Producer prices data cooler than expected
    

        * 
      Netflix jumps after Wedbush sees revenue growth
    

        * 
      Harley-Davidson dips as CFO steps down
    

  
 (Updates to market close)
    By Stephen Culp
       NEW YORK, April 13 (Reuters) - 
    U.S. stocks ended sharply higher on Thursday as economic
data showed cooling inflation and a loosening labor market,
fueling optimism that the Federal Reserve could be nearing the
end of its aggressive interest rate hike cycle.
  
        All three major U.S. stock indexes surged, with interest
rate sensitive megacaps providing the most upside muscle and
pushing the tech-heavy Nasdaq to its biggest one-day percentage
jump in nearly a month.
    Data released before the bell showed a steeper-than-expected
cooldown in producer prices and new claims for jobless benefits
coming in above consensus. Both signal that the Fed's hawkish
barrage of rate hikes, which began over a year ago, is working
as intended.
    The data comes on the heels of Wednesday's muted Consumer
Price Index report, which cemented the likelihood of yet another
25 basis point rate hike at the conclusion next month's FOMC
policy meeting.
    "Markets rallied today following the lower inflation data
this morning, as it's still all about the Fed so it's really all
about inflation," said David Carter, investment specialist at
JPMorgan Private Bank in New York.
        "Together with yesterday's muted CPI data, PPI is also
suggesting some slowdown in inflation which could mean a quick
end to Fed tightening."
  
    Financial markets are pricing in a roughly one-in-three
probability that the central bank will press the pause button
and let the Fed funds target rate stand in the 4.75% to 5.00%
range, according to CME's FedWatch tool.
    Investor focus now shifts to first-quarter earnings season,
which jumps into full swing on Friday when a trio of big banks,
Citigroup  C.N , JPMorgan Chase & Co  JPM.N , Wells Fargo & Co
 WFC.N  report.
        "Tomorrow's bank earnings could give insight into the
strength of regional banks and future lending activity," Carter
added. "It will be interesting to see what banks say tomorrow
about future economic growth."
  
    Analysts expect aggregate first-quarter S&P 500 earnings to
come in 5.2% below the year-ago quarter, a stark reversal from
the 1.4% year-on-year growth seen at the beginning of the
quarter, according to Refinitiv.
    According to preliminary data, the S&P 500
 .SPX  gained 53.96 points, or 1.33%, to end at 4,145.91 points,
while the Nasdaq Composite  .IXIC  gained 236.94 points, or
1.99%, to 12,166.27. The Dow Jones Industrial Average
 .DJI  rose 382.54 points, or 1.14%, to 34,029.04.
    Delta Air Lines Inc  DAL.N  shares dipped following the
company's first-quarter profit miss.
    Shares of Harley-Davidson Inc  HOG.N  slid after the
motorcycle maker announced Chief Financial Officer Gina Goetter
was leaving the company at the end of April.
    Groupon Inc  GRPN.O  jumped following the company's
appointment of Jiri Ponrt to succeed Damien Schmitz as chief
financial officer.
    Netflix Inc  NFLX.O  advanced after Wedbush said the
streaming platform's revenue growth of new subscribers could
drive up profitability.

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Inflation    https://tmsnrt.rs/3KUFKgS
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 (Reporting by Stephen Culp; Additional reporting by Sruthi
Shankar and Ankika Biswas in Bengaluru; Editing by Richard
Chang)
 ((stephen.culp@thomsonreuters.com; 646-223-6076;))