U.S. stock benchmarks remained modest on Wednesday after data showed inflation remained subdued and ahead of a House vote on the charges against President Donald Trump a week before he took office.
What do major indices do?
The Dow Jones industrial average
was up 60 points, up 0.2% to trade near 31,128.
The S&P 500
up 11 points, 0.3%, near 3,812.
The Nasdaq Composite
gained 67 points, 0.5% to trade near 13,139.
Stocks battled for direction on Tuesday, switching between modest gains and losses before closing higher, allowing the Dow, S&P 500 and Nasdaq Composite to avoid their first consecutive losses of 2021.
What is driving the market?
US inflation remained low in December, with the 10-year US Treasury Note BX: TMUBMUSD10Y slipping to its highest level since March last year after rising over 1.0% in the past two weeks.
The consumer price index rose 0.4% while the core index excluding volatile food and energy prices rose 0.1%, in line with the MarketWatch consensus. The annual headline count rose to 1.4%, but the core number stayed at 1.6%.
Headline CPI has now risen for seven straight months and investors will be keeping an eye on inflation, Boris Schlossberg, managing director of BK Asset Management, said in a note. This is because the stock market rally is based on ultra-low interest rates that enable much higher stock valuations, he said.
And while interest rates remain historically low, “the markets are always a relative game rather than an absolute game, and even a 50 basis point 1% increase means a 50% increase in interest rates which could lead to massive speculative outflows of stocks – especially those with high multiples, ”said Schlossberg, referring to the price-performance ratio.
See: One investor says rising US Treasury bond yields will not hurt stocks
Meanwhile, stocks continue to be supported by expectations that President-elect Joe Biden and a democratically-controlled Congress will push through another large round of relief spending to sustain the economic recovery from the coronavirus pandemic.
The US has the highest number of reported cases in the world at 22.8 million and the highest death toll at 380,821, or more than a fifth of the world's total. According to a New York Times tracker, the US added at least 229,603 new cases and counted at least 4,402 deaths on Tuesday, most in a single day since the outbreak began.
On US political news, Donald Trump could become the first president in US history to be charged twice as the House of Representatives prepares on Wednesday to launch a riot indictment following last week's riotous invasion of the Capitol to approve.
Peter Andersen, founder of Andersen Capital, believes that political considerations weigh much more heavily on the market than many investors might think.
"The market just has no direction right now," Andersen told MarketWatch. “People are so focused on the short term development. I hold on until the opening and don't make any investment decisions as there is almost chaos in the market. Nobody has any idea how things are going to work out, so we get fluctuations that don't make sense. "
Markets weren't showing much volatility, Andersen noted, but added, "The orderly nature of things can put people off, and I think if you look below the surface and now you've surveyed all market participants, they'd say, damn it, if I White. "This is much worse, much more difficult than 2008."
Also on Wednesday at 2 p.m., the Federal Reserve's Beige Book report, a survey of companies by region, will be released. Several Fed officials will also make remarks on Wednesday, including Governor Lael Brainard at 1 p.m. and Vice Chairman Richard Clarida at 3 p.m.
Which companies are in focus?
Regeneron Pharmaceuticals Inc.
Shares rose 1.3% after the company announced late Tuesday that the U.S. government agreed to purchase an additional 1.25 million doses of the company's COVID-19 antibody cocktail.
Exxon Mobil Corp.
Stocks rose 0.8% after an analyst upgrade.
Shares of Plug Power Inc.
rose 6.9% after more than doubling in recent days.
Shares of DocuSign Inc.
fell 1.6% after the electronic signature company announced pricing for an expanded offering of convertible bonds.
Shares rise Wednesday morning after the company confirmed that CEO Bob Swan is stepping down and being replaced by VMware Inc. CEO Pat Gelsinger.
Stocks gained 17% after an analyst upgrade and a target price increase.
What are other assets doing?
The yield on the 10-year US Treasury bill
fell about 3 basis points to 1.104% after the inflation data was released.
The ICE US dollar index
A currency measure versus a basket of six major competitors rose 0.3%.
Oil futures lost ground after up and down the morning against the US benchmark
0.6% lower at $ 52.89 a barrel even as inventories fell. Gold futures
were 0.7% higher at $ 1,856.20 an ounce.
The Europe-wide Stoxx 600 Index
traded 0.1% higher while London's FTSE 100
was 0.1% lower.
In Asia, the Shanghai Composite
closed 0.3% lower while Hong Kong's Hang Seng index
lost 0.2% and the Japanese Nikkei 225 index NIK rose 1%
Continue reading: Reflation nation? This time, the tailwind after the crisis is favoring the banks and the economy