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Stocks Mixed Before More Inflation Data, Brainard Hearing Ahead—and What Else Is Happening in the Stock Market Today

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Lael Brainard’s nomination hearing to be vice chair of the Federal Reserve will be in focus.

Al Drago/Bloomberg

Stocks were inching higher as investors hung up on inflation and interest rates looked ahead to more economic data Thursday, as well as the Senate testimony of Federal Reserve Governor Lael Brainard.

Futures for the Dow Jones Industrial Average indicated an open less than 30 points higher, after the index rose 38 points Wednesday to close at 36,290. The S&P 500 and Nasdaq were on track for a similar start about 0.1% higher.

Overseas, London’s FTSE 100 was hovering near flat, with the index pulled in different directions amid a wave of quarterly earnings releases. Hong Kong’s Hang Seng Index rose 0.1%.

Monetary policy—and its impact on bond yields—as well as inflation has been the driving force behind markets over the past week. In the day ahead, investors are likely to react to new inflation data from the producer-price index (PPI) for December, which is expected to show a 0.4% month-over-month rise. 

That comes after a very high inflation reading Wednesday—a 7% annual rise in the consumer-price index (CPI), the fastest rate since 1982. Stocks rose slightly on the back of yesterday’s data as markets saw the upside. Inflation is seen nearing its peak—and investors were worried about a much higher print—and signs of slowing inflation are a moderating force on hawkishness from the Fed.

“Yesterday’s market reaction could raise the hope that perhaps global inflationary pressures might be starting to diminish,” said Michael Hewson, an analyst at broker CMC Markets.

“This seems a little premature on the basis of one month’s numbers, however this afternoon’s U.S. PPI could add an extra quiver to that argument if we see a similar trend in today’s December numbers,” he added. “PPI has tended to be a leading indicator for headline CPI for most of last year, and is already well above CPI levels.”

Fed. Gov. Brainard’s testimony before the Senate at her nomination hearing as the next vice chair of the central bank will also be in focus for more signals on monetary policy. Brainard said Wednesday that inflation was “too high” and that lowering it would be a priority. Weekly initial jobless claims are also in the spotlight Thursday.

Indications from the Fed have shown the central bank on track for earlier, faster interest-rate increases, with markets pricing in three rate increases this year and the first in March. Tighter policy ahead, and an upbeat tone from the Fed on the strength of the U.S. economy, have seen bond yields rise, pressuring stocks.

But investors’ nerves were soothed by Fed Chair Jerome Powell Tuesday when the central banker exhibited support for the market and said the Fed would act to curb inflation. That has helped yields on the benchmark 10-year U.S. Treasury note stay below 1.8%, a Covid-19 pandemic-era high reached in a spike Monday. The yield on the 10-year bond was up slightly Thursday to 1.75%.

“We expect the U.S. 10-year yield to move from the current 1.73% to around 2% over the coming months, as investors digest the Fed’s more hawkish stance along with further elevated inflation readings,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “That said, we don’t expect a sharp rise in yields that will imperil the equity rally.”

In the commodity space, crude prices continued their steady upward march, with futures contracts for international oil benchmark Brent up 0.2% to almost $85 a barrel. U.S. futures for West Texas Intermediate crude were similarly higher to near $83.

Cryptocurrencies were inching higher again Thursday, with Bitcoin —the leading crypto—up 2.5% over the last 24 hours, according to data from CoinDesk. Smaller peer Ether rose 3.5%, approaching $3,400.

Here are three stocks on the move Thursday:

Chip group Taiwan Semiconductor Manufacturing Co. (ticker: TSM) rose more than 4% in the New York premarket after posting strong quarterly results. The world’s largest contract semiconductor manufacturer saw a 16.4% jump in net profit on a 21.2% spike in sales amid strong demand and tight supply. That also boosted peer STMicroelectronics (STM), which was up 3% in the premarket trade.

Crypto exchange Coinbase (COIN) rose near 3% in the premarket after the group said it would be acquiring FairX, a derivatives exchange.

Write to Jack Denton at jack.denton@dowjones.com