The U.S Stock Market Rose Today for the Fourth Straight Day Despite Hotter Than Expected Wholesale Inflation Data.

On Wednesday, U.S. stock indexes were in positive territory, with traders carefully analyzing the producer-price index for September. This index revealed that wholesale prices rose more than expected during the month. Investors were also eagerly awaiting the release of the minutes from the Federal Reserve's most recent policy meeting, scheduled for later in the session. In addition, a closely-watched consumer-price index report was set to be published on Thursday morning.

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Here's how the stock indexes were performing on that day:

• The S&P 500 (SPX) climbed by 9 points, or 0.2%, reaching 4,367.
• The Dow Jones Industrial Average (DJIA) gained 73 points, or 0.2%, hitting 33,808.
• The Nasdaq Composite (COMP) saw an increase of 77 points, or 0.6%, reaching 13,639.

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On the preceding day, the Dow industrials had risen by 0.4%, while the S&P 500 had increased by 0.5% to reach 4,358, and the Nasdaq Composite had gained 0.6%, as per data.

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The positive performance of U.S. stocks was primarily driven by the September producer-price index, which showed a 0.5% increase for the month, supported by higher energy costs. While this was slightly lower than the 0.7% increase observed in August, it surpassed the Dow Jones consensus estimate of a 0.3% gain. The core PPI, which excludes food, energy, and trade services components, rose by 0.2% in September, aligning with expectations.

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Gregory Daco, the chief economist at EY, expressed confidence in the PPI inflation trend despite acknowledging the temporary impact of higher energy prices. Daco pointed out that while the deflationary pressure resulting from supply chain disruptions has subsided, the significant deflation in the PPI for trade services, which reflects margins, is likely to contribute to lower consumer price inflation.

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Regarding the Federal Reserve's view on rising 10-year Treasury yields, Daco noted that officials seemed to be equating the increase with an equivalent fed funds rate rise. However, the ratio might be greater, meaning that the rapid surge in long-term yields could lead to not only additional rate hikes but also earlier rate cuts.

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The 10-year Treasury yield continued to retreat from its 16-year highs reached the previous week, decreasing by 7 basis points to 4.588% on that Wednesday morning. In contrast, the 2-year Treasury yield advanced by 4 basis points, reaching 5.004%, according to FactSet data. This decline in long-term implied borrowing costs followed indications from Federal Reserve officials suggesting that the central bank might have completed its interest rate hikes for this cycle.

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Investors were also anticipating the release of the U.S. consumer price index report for September, scheduled before the opening of Wall Street on Thursday. In addition to this, they had the minutes from the Fed's previous policy meeting to dissect, which were set to be released at 2 p.m. Eastern.

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The Fed's minutes could convey a "hawkish" tone regarding the neutral real policy rate in the U.S., potentially reversing the bond rally that had occurred on Wednesday. Thierry Wizman, a global FX and interest rates strategist at Macquarie, explained that the neutral rate of interest, often referred to as "r-star," represents the real short-term interest rate expected when the economy is operating at full capacity with stable inflation.

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To witness a more sustainable shift toward a 4% 10-year Treasury yield, signs of a genuine consumer-led slowdown would need to emerge, according to Wizman. This could eventually prompt the Fed to move away from the "higher-for-longer" interest-rate narrative. He advised keeping an eye on the fourth-quarter guidance from consumer companies as a potential indicator of a consumer slowdown.

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In addition to these economic indicators, traders were preparing for the commencement of the third-quarter company earnings reporting season, with major banks such as JPMorgan Chase, Citigroup, and Wells Fargo set to release their earnings reports on Friday.

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Furthermore, there were several Fed speakers scheduled for the day, with Fed Governor Christopher Waller, Atlanta Fed President Raphael Bostic, and Boston Fed President Susan Collins all delivering speeches on various economic topics.

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