Stock Market Today: Stocks higher, Treasury yield slide on dovish Fed rate signals

U.S. equity futures edged higher Wednesday, with stocks looking to extend their recent run of gains to a fourth consecutive session, as markets react to more dovish rate signals from Federal Reserve officials heading into the start of the third quarter earnings season.

While maintaining a close and cautious eye on developments in Israel, following the surprise and brutal attack from Hamas in Gaza over the weekend, investors have extended their moves into risk markets this week as the Fed appears to suggest that its rate-hike cycle has come to an end, thanks in part to the recent surge in Treasury bond yields. 

Atlanta Fed President Raphael Bostic, in fact, told an American Bankers Association event last night that the economy is "in a good place for policy to get us to 2%", the Fed's inflation target, adding that current interest rate levels as "sufficiently restrictive".

Minutes of the Fed's last policy meeting in September, which will be published at 2:00 pm Eastern time, are likely to reflect similar thinking amongst Fed rate-setters, but the move powerful tool has been the run-up in Treasury yields, which lifted benchmark 10-year notes to a 2007 high of 4.985% last week.

The paper was marked notably lower this morning, at 4.562%, heading into a $35 billion auction of new notes later today, while 2-year notes were pegged at 4.957% as bets on an end-of-year Fed  rate hike fall to just 24%, according to data from the CME Group's FedWatch.

With yields marching lower, and the dollar hitting a multi-week trough against its global peers, stocks are set to extend their run of modest gains into the start of the Wednesday session, ahead of producer price inflation data for the month of September at 8:30 am Eastern time.

Delta Air Lines  (DAL) - Get Free Report will also publish its third quarter earnings prior to the opening bell, with investors focused on the run-up to the reporting season, which unofficially begins on Friday.

Collective S&P 500 earnings for the three months ending in September are expected to grow 1.3% from last year to a share-weighted $464.4 billion, according to Refinitiv data, representing the strongest quarterly gain of the year.

Futures contracts tied to the S&P 500 are priced for a 7 point opening bell gain while those linked to the Dow Jones Industrial Average are indicating a 54 point move to the upside. The Nasdaq is called 44 points higher.

In other markets, oil prices gave back more gains in the overnight session, with traders looking to Energy Department data on stockpiles, exports and the Strategic Petroleum Reserve later this year, as concerns over the regional impact of Hamas' attack on Israel fades further.

Brent crude contracts for December delivery, the global pricing benchmark, were last seen 23 cents lower on the session at $87.42 per barrel while WTI crude futures for November slipped 27 cents to $85.70 per barrel.

In overseas markets, Europe's Stoxx 600 benchmark added 0.13% in early Frankfurt trading, with Britain's FTSE 100 up 0.13% in London.

Overnight in Asia, the region-wide MSCI ex-Japan index was on pace for its best session in more than two months, rising 1.25% into the close of trading, following stronger-than-expected third quarter earnings from Samsung that boosted markets in South Korea as well as reports of fresh fiscal stimulus from China. 

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