Wall Street rises as PayPal takeover bid, cooling US inflation and bank earnings lift markets
US stocks have opened higher as investors keep an eye on major companies' earning results.
Wall Street’s main indices have edged higher as softer-than-expected producer inflation data and a flurry of corporate earnings supported sentiment while PayPal surged on news of a takeover offer.
Strong results from major banks for a second straight day helped sustain an upbeat tone for the second-quarter earnings season.
The S&P 500 financial sector gained 0.6 per cent.
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Its shares were up 0.6 per cent.
“The large banks continue to demonstrate the strength of the US consumer and corporate balance sheets. Healthy banks are typically a positive signal for the broader economy,” said Charlie Anderson, senior vice president, UBS Wealth Management.
PayPal Holdings jumped nearly 14 per cent after sources told Reuters payments company Stripe and private equity firm Advent International have jointly offered to acquire it for $US60.50 per share - representing about a 28 per cent premium to its Tuesday close.
On the benchmark S&P 500, nine of the 11 sectors were in the green, with consumer discretionary leading gains.
The earnings season is gathering pace at a crucial point for equities.
The S&P 500 has climbed more than 10 per cent this year and is within striking distance of its June record close, leaving the rally vulnerable to any disappointment in corporate results.
Data on Wednesday showed the Producer Price Index for final demand unexpectedly fell 0.3 per cent in June, compared with forecasts for a flat reading, adding to signs that inflation was easing before the recent escalation in the Middle East conflict.
The report followed Tuesday’s softer-than-expected consumer inflation data, which tempered expectations for an imminent Federal Reserve rate hike.
“With the Fed offering limited forward guidance, each inflation reading is prompting more volatility in rate expectations,” said Charlie Ripley, portfolio manager at Allianz Investment Management.
Traders are pricing in about a 12 per cent chance of a quarter-point rate increase at the Fed’s next meeting, down from nearly 41 per cent before the CPI report, according to CME’s FedWatch tool.
Wednesday marks the second day of Federal Reserve chair Kevin Warsh’s testimony before Congress.
Warsh told lawmakers on Tuesday that one data point was not enough to declare victory over inflation.
In early trading on Wednesday, the Dow Jones Industrial Average rose 190.64 points, or 0.36 per cent, to 52,698.91, the S&P 500 gained 23.82 points, or 0.30 per cent, to 7,566.51 and the Nasdaq Composite gained 113.40 points, or 0.43 per cent, to 26,220.41.
Geopolitical tensions also remained in focus following the United States beginning a new wave of strikes against Iran after reimposing a naval blockade of its ports.
Elevance Health slipped 8.6 per cent even after raising its annual profit forecast, as the revision fell short of investors’ lofty expectations.
Advancing issues outnumbered decliners by a 1.91-to-1 ratio on the NYSE and by a 1.51-to-1 ratio on the Nasdaq.
