- A day after hot inflation sparked the biggest rout in more than two years, US stocks recovered in late trading. The dollar fell, while short-term treasury yields rose.
- The S&P 500 resumed its upward trend after swinging between gains and losses for much of the day. As investors weighed the Federal Reserve's next policy steps, trading volume was 18% higher than the 30-day average at this time of day. The benchmark fell more than 4% on Tuesday after a surprise consumer-price figure prompted investors to increase their bets on interest-rate hikes. Those fears were allayed on Wednesday when data showed that producer prices fell for the second month in a row. Retail sales are due on Thursday and University of Michigan readings on Friday will be scrutinized for clues on the economy's strength and inflation expectations.
- Swaps traders are now pricing in a three-quarters-point increase when the Fed meets next week, with some betting on a full point increase. The two-year treasury yield, which is the most sensitive to policy changes, rose two basis points after rising as much as 22 basis points on Tuesday, pushing it more than 30 basis points above the 10-year rate and deepening an inversion in what is typically a recession indicator.
