Stocks - Wall Street Opens Higher as CPI Points to Rebound; Dow up 260 Points

By Geoffrey Smith 

Investing.com -- U.S. stock markets opened higher on Wednesday, bouncing back from Tuesday's losses after data suggested that companies' pricing power isn't being destroyed, despite the hit to demand from the sharp rise in unemployment caused by the pandemic.

Data released earlier showed the core consumer price index, which excludes food and energy, rose by 0.6% in July, its sharpest monthly increase in nearly 30 years and well ahead of expectations for an increase of 0.2%. That followed Tuesday's report showing that producer prices, too, rose by 0.6% last month.

The figures gave extra support to cyclical stocks, which were already enjoying a lift from strengthening hopes for a vaccine that will suppress the fear of Covid-19 and allow consumers to return to normal lives more quickly than previously expected. President Donald Trump had announced plans after the close on Tuesday to buy 100 million doses of Moderna (NASDAQ:MRNA)'s experimental anti-Covid 19 drug if and when it passes its stage 3 tests.  Moderna stock rose 3.7% at the opening.

By 9:40 AM ET (1340 GMT). the Dow Jones Industrial Average was up 256 points, or 1.0% at 27.943 points. The S&P 500, which briefly hit a record high on Tuesday before being caught by the later sell-off, was up 1.0%, while the Nasdaq Composite was up 1.1%.

Tesla (NASDAQ:TSLA) stock was among those most actively traded, rising 5.4% after the company announced a five-for-one stock split after the close on Tuesday. The move makes no difference to Tesla's market value by itself, and the broadening of its appeal to smaller investors is only marginal. However, it appears to have reheated speculation on the stock being imminently included in the S&P 500 index, which would force passively-managed index funds with trillions of dollars under management to find room for it in their portfolios.

Qualcomm (NASDAQ:QCOM) stock rose 2.1% to be within 2% of an all-time high after a federal appeals court overturned an antitrust ruling against the chipmaker that aimed to stop it obtaining royalties from makers of smartphones.

Tencent Holdings ADRs (OTC:TCEHY)  rose 2.7% after publishing second-quarter earnings that were ahead of expectations, reassuring investors that its core Chinese businesses are still highly profitable despite threats of U.S. sanctions against its WeChat messaging app.

In other markets, gold prices steadied as the CPI data restored market faith in the U.S. authorities efforts to reflate the economy. After rebounding overnight Gold Futures were down 0.2% at $1,942/oz. TheDollar Index inched down 0.1% to 93.494.

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