By Stephen Culp
NEW YORK (Reuters) -U.S. stocks moved higher in muted trading and Treasury yields slipped on Wednesday as economic data affirmed inflation is cooling and investors bided their time ahead of the U.S. Federal Reserve’s rate decision.
The S&P 500 and the Nasdaq were modestly higher while the Dow was essentially flat after notching 2023 closing highs in the previous session, while crude regained some ground in the wake of Tuesday’s slide.
Economic data showed U.S. producer prices (PPI) were unchanged in November, providing further evidence that inflation continues to meander down toward the Fed’s average annual 2% target.
The Federal Open Markets Committee (FOMC) is widely expected to leave the Fed funds target rate at 5.25%-5.50% when it wraps up its two-day monetary policy meeting at 2 p.m. EST.
But its summary economic projections, including its dot plot, will be parsed for clues regarding the central bank’s intentions over the coming year, including the timing and frequency of any rate cuts.
“It’s wait-and-see until the Fed, which is the last piece of big news of the year and people get a bit of a breather,” said Thomas Martin, Senior Portfolio Manager at GLOBALT in Atlanta.
“Then we’ll see just how well positioned (investors) think they are after 2 o’clock,” he added.
“It’s all about what the dots are going to show and whether there will be a change in the statement that goes from a tightening bias to a neutral bias.”
In a busy week for central banks, the European Central Bank and the Bank of England will announce policy decisions on Thursday.
The Dow Jones Industrial Average rose 13.33 points, or 0.04%, to 36,591.27, the S&P 500 gained 10.41 points, or 0.22%, to 4,654.11 and the Nasdaq Composite added 49.36 points, or 0.34%, to 14,582.76.
European shares rose, with a boost from chemical manufacturers, although investors shied away from risky bets ahead of the Fed decision.
The pan-European STOXX 600 index rose 0.17% and MSCI’s gauge of stocks across the globe gained 0.18%.
Emerging market stocks lost 0.45%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.35% lower, while Japan’s Nikkei rose 0.25%.
Treasury yields fell after producer prices cooled more than expected, supporting expectations that the Fed has reached the end of its tightening cycle.
Benchmark 10-year notes rose 13/32 in price to yield 4.1585%, from 4.206% late on Tuesday.
The 30-year bond rose 20/32 in price to yield 4.2682%, from 4.304% late on Tuesday.
The dollar inched up against a basket of world currencies.
The Japanese yen strengthened 0.13% versus the greenback to 145.26 per dollar, while Sterling was last trading at $1.2525, down 0.29% on the day.
Oil prices bounced back after tumbling to near six-month lows on Tuesday, driven by concerns of oversupply and waning demand.
U.S. crude rose 1.17% to $69.41 per barrel and Brent was last at $73.78, up 0.74% on the day.
Spot gold added 0.1% to $1,980.53 an ounce.
(Reporting by Stephen Culp; Additonal reporting by Rae Wee in Singapore and Alun John in London; Editing by Kirsten Donovan)
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