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Stocks Rise Pre-Bell Ahead of PPI Data, Fed Chair Warsh's Testimony

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Stocks Rise Pre-Bell Ahead of PPI Data, Fed Chair Warsh's Testimony

The main US stock measures were trending higher in Wednesday's premarket activity as traders await the latest data on wholesale prices, Federal Reserve Chair Kevin Warsh's testimony and another batch of earnings.

The S&P 500 and the Dow Jones Industrial Average increased 0.2% each before the opening bell, while the Nasdaq added 0.5%. The indexes finished the previous trading session higher.

Last month's producer price index, a measure of wholesale prices, is scheduled to be released at 8:30 am ET. The report comes a day after government data showed that consumer inflation declined in June, its first monthly drop since May 2020 and the largest decrease since April 2020, amid lower energy costs.

"Investors and the (Fed) will breathe a sigh of relief at the size of the improvement in the inflation numbers last month, likely keeping an imminent rate hike off the table later this month," BMO Chief US Economist Scott Anderson said in a Tuesday note.

There's an 86% likelihood that the Fed will keep its monetary policy unchanged later this month, up from 84% on Tuesday, according to the CME FedWatch tool. The odds of a 25-basis-point rate increase moved down to 14% from 16%.

Warsh is set to testify before the Senate Banking Committee at 10 am. Speaking before a House of Representatives committee on Tuesday, Warsh vowed to curb high inflation straining American consumers and companies and reiterated the central bank's commitment to restore price stability.

Fed Governor Lisa Cook, New York Fed President John Williams and St. Louis Fed President Alberto Musalem are due to speak on Wednesday.

Treasury yields were in the green in premarket action, with the two-year rate rising 2.6 basis points to 4.22%, while the 10-year rate gained 2.3 basis points to 4.61%.

Johnson & Johnson (JNJ), Morgan Stanley (MS), BlackRock (BLK), Progressive (PGR), Bank of New York Mellon (BNY), PNC Financial Services (PNC), Elevance Health (ELV) and Cintas (CTAS) report their latest financial results before the bell, among others. United Airlines (UAL) and J.B. Hunt Transport Services (JBHT) post earnings after the market closes.

On Tuesday, banking giants JPMorgan (JPM), Bank of America (BAC), Goldman Sachs (GS), Wells Fargo (WFC) and Citigroup (C) reported better-than-expected second-quarter results.

Wednesday's economic calendar also has the weekly mortgage applications bulletin at 7 am, followed by the Empire State manufacturing index for July at 8:30 am. The weekly EIA domestic petroleum inventories report is out at 10:30 am, followed by the Fed's Beige Book, a compilation of economic and business reports from the 12 regional Fed branches, at 2 pm.

West Texas Intermediate crude oil inclined 1.2% to $80.27 a barrel before the open, while Brent advanced 1% to $85.63.

President Donald Trump said Tuesday he would no longer demand a 20% "reimbursement fee" from ships passing through the Strait of Hormuz. In a social media post, Trump said he has "decided to replace" the fee with "trade and investment deals" with Gulf countries.

Amid renewed tensions in the Middle East, Trump said a "full blockade" will be enforced on all ships coming to and from Iranian ports. The US Central Command reportedly said it carried out another wave of strikes against Iran late Tuesday, according to CNBC.

Shares of International Business Machines (IBM) rebounded 0.9% pre-bell after closing the previous session down 25%, as the company reported preliminary second-quarter results below Wall Street's expectations. PayPal (PYPL) jumped 19% following media reports that Stripe and Advent International have offered to acquire the payments company in a deal worth more than $53 billion.

Gold declined 0.8% to $4,037 per troy ounce, while bitcoin edged up 0.2% to $64,689.

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