NEW YORK (AP) โ Wall Street is drifting Wednesday ahead of a report that could bolster or dash the hopes that drove stocks higher until late last year.
The S&P 500 rose 0.3% in midday trading, a day after barely moving. The Dow Jones Industrial Average was up 70 points, or 0.2%, as of 11 a.m. ET, and the Nasdaq composite was up 0.5%.
Intuitive Surgical rose 5.6% after the maker of robotic surgery systems said it expects to report stronger revenue by the end of 2023 than analysts expected. Homebuilder Lennar rose 3.5% after saying it would send cash to shareholders by increasing its dividend and authorizing a buyback of up to $5 billion of its own shares.
But the market's focus is on Thursday, when the US government will release its latest monthly update on consumer inflation. A cooldown from its peak in the summer of 2022 has raised hopes that the Federal Reserve could sharply cut interest rates this year. That, in turn, has caused Treasury yields to fall in the bond market and stock prices to rebound to record highs.
Economists expect Thursday's report to show that prices paid by American consumers were 3.2% higher in December than a year earlier, according to FactSet. That would be a slight acceleration from November's 3.1% inflation rate. But after ignoring the effects of food and fuel prices, which can change rapidly from month to month, economists believe underlying inflation trends likely continued to cool.
The Fed has noticed the cooling of inflation, and hints at a possible reduction in interest rates three times this year. It would be a sharp reversal after it sharply raised rates in hopes of slowing the economy and hurting investment prices enough to reduce high inflation.
But many traders expect twice as many rate cuts. Critics say that's too optimistic and that the Federal Reserve is unlikely to cut that many times unless a recession hits. If Thursday's inflation data comes in warmer than expected, it could upset those hopes and shake up the market.
The 10-year Treasury yield has already fallen well below its above-5% position in October on strong hopes for rate cuts. It fell slightly on Wednesday to 4.00% from 4.02% on Tuesday night.
On Wall Street, Boeing shares stabilized after falling earlier in the week following the mid-air explosion of one of its planes flying for Alaska Airlines. It rose 1.5%.
WD-40 jumped 17.2% after reporting stronger fourth-quarter earnings than analysts expected.
The large companies in the S&P 500 will begin reporting their results for the last three months of 2023 on Friday. Delta Air Lines, JPMorgan Chase and UnitedHealth Group will be among the headliners that day.
Some of Wall Street's steepest losses came from stocks of oil and gas companies. Exxon Mobil sank 1% and Valero Energy lost 1.7%.
Crude oil prices were falling after giving up gains made earlier in the day. They had also fallen sharply at the beginning of the week. The benchmark US oil barrel fell 0.1% to $72.14. Brent crude, the international standard, fell 0.1% to $77.50 a barrel.
In overseas stock markets, Tokyo's Nikkei 225 gained 2% to hit its highest level since March 1990, as a weaker yen lifted shares of exporters. The yen sank on speculation that the Bank of Japan could maintain its ultra-loose monetary policies after wages fell for the 20th straight month in November. A weaker yen can boost profits for companies that sell their products in other currencies.
Rates were mostly lower in much of the rest of Asia and Europe.
In the case of cryptocurrencies, bitcoin fell after a wild ride in which its price rose and then fell a day earlier. Cryptocurrency investors have been excited by the prospect of US regulators allowing trading in exchange-traded funds containing actual bitcoins, rather than just futures contracts linked to them.
On Wednesday night, the Securities and Exchange Commission's account in x, formerly known as Twitter, said it had approved such ETFs. Shortly after, however, the SEC said no approval had been given and that his account had been compromised.
It's the latest surprising caper in a corner of the market that SEC Chairman Gary Gensler called the "Wild West" in 2021 because it didn't have enough investor protections at the time.
