Stock Market Today: Stocks higher, yields retreat with inflation in focus

U.S. equity futures moved higher Thursday, while the dollar slipped lower against its global peers and Treasury yields steadied, as investors extended bets on the end of the Fed's rate hiking cycle ahead of a key inflation report prior to the opening bell.

Benchmark 10-year note yields have retreated more than 30 basis points over the past week, when the paper hit a 2007 high of 4.895%, with the dollar giving back gains on foreign exchange markets, amid a series of comments from Fed officials that suggested the central bank could use the elevated market rates as an extension of its base rate policy to slow the economy and fight inflation.

That view was echoed yesterday by Fed Governor Christopher Waller, who told a Republican party event that "the financial markets are tightening up and they are going to do some of the work for us."

"We are just keeping a very close eye on that. We will see how those higher rates feed into what we do on policy in the coming months," he added.

Investors remain wary over a resurgence in inflation, however, following a modest uptick in core producer prices in September and a weak 10-year Treasury auction that saw demand from foreign investors fall to the lowest levels since last year. 

Still, bets on a November rate hike, based on data from the CME Group's FedWatch, have fallen to around 8.6% and the chances of an end-of-year move from the Fed are no greater than 27%. 

That's given stocks room to run this week, with the third quarter earnings season in sharp focus, as yields retreat and mega-cap tech companies once again lead gains for the major indices on Wall Street.

Heading into the start of the Thursday session, futures suggest modest advances ahead of the September consumer price inflation reading at 8:30 am Eastern time, with contracts tied to the S&P 500 indicating a 14 point opening bell gain.

Futures linked to the Dow Jones Industrial Average are indicating a 95 point opening bell advance and those tied to the Nasdaq are priced for a 60 point move to the upside. 

Global oil prices were back moving higher Thursday, as well, following comments from Saudi Arabia's powerful energy minister that suggested the Kingdom could move to stabilize markets amid the disruption linked to the war in Israel. 

Brent crude contracts for December delivery, the global pricing benchmark, were last seen 85 cents higher on the session at $86.67 per barrel while WTI crude futures for November added $55 cents to change hands a$84.04 per barrel ahead of delayed data from the Energy Department data on stockpiles, exports and the Strategic Petroleum Reserve later in the session.

In overseas markets, Europe's Stoxx 600 was marked 0.67% higher in early Frankfurt trading, taking the benchmark to a three-week high, with stocks tracking the pullback in government bond yields at home and in the U.S.

Overnight in Asia, the region-wide MSCI ex-Japan index was marked 0.9% higher into the close of trading, pegging the benchmark at a three-week high, amid more indications that China will execute a fresh round of stimulus to support its moribund post-Covid growth prospects.  

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