Wall Street Opens Higher on PPI Relief, Ukraine Peace Hopes; Dow up 150 Pts By

© Reuters.

By Geoffrey Smith 

-- U.S. stock markets opened higher on Tuesday, as the first lower-than-expected price data in months and a sharp drop in oil prices combined to relieve some of the anxiety around galloping inflation.

The producer price index rose by 0.8% on the month in February, a shade less than the 0.9% expected. But the core PPI, which excludes food and energy prices, rose by only 0.2%, well below expectations and its lowest rise in five months. The last time that the core PPI had risen by less was in December 2020. A string of rapid price increases by U.S. companies still leaves the year-on-year PPI at 10.0%, however, an uncomfortable backdrop for the start of the Federal Reserve's policy meeting later Tuesday.

The mood was also helped by more conciliatory statements from Ukrainian President Volodymyr Zelensky talking down the prospects of Ukraine joining NATO, a concession to Russia's security demands that may advance the hitherto fruitless peace talks between the two countries.

By 9:45 AM ET (1345 GMT), the Dow Jones Industrial Average was up 151 points, or 0.5% at 33,097 points. The S&P 500 was also up 0.5% and the NASDAQ Composite was up 0.3%. All three indices were paring the gains they had made at the open.

Tesla (NASDAQ:TSLA) stock fell 0.3% after the electric vehicle maker illustrated the problem of producer price inflation at the company level. The company raised its prices for almost all of its output in the U.S. and China for the second time in a week. While it didn't explain why, the moves come after a surge in battery metals Copper and - especially - Nickel since the Russian invasion. Russia is one of the world's largest sources of nickel, and its output would be sorely missed on world markets if Western sanctions bite as they are supposed to. 

Airline stocks rose sharply after Delta (NYSE:DAL), United Airlines (NASDAQ:UAL) and American Airlines (NASDAQ:AAL) all said they intend to work at slightly lower levels of capacity than foreseen earlier. That reduces the risk of margins being crushed by flying half-full planes at a time when fuel prices have skyrocketed. The sector, which is still struggling to put the wave of Omicron-variant Covid-19 behind it had underperformed badly during the first two weeks of the war, faced not only with soaring fuel costs but also by the closure of Russian airspace, which makes their long-distance routes to Asia more challenging.

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