Stocks rise as inflation report keeps Fed on track for hikes

Stocks are opening higher after the latest report of surging prices appeared to keep the Federal Reserve on track to raise interest rates later this year. The S&P 500 was up 0.4% in the early going Wednesday. Technology stocks were doing better than the rest of the market, pushing the Nasdaq up 0.9%. Bond yields slipped. The yield on the 10-year Treasury note fell to 1.72%. Inflation jumped 7% last month, its fastest year-over-year pace in nearly four decades, but in line with economists’ forecasts. Fed Chair Jerome Powell told Congress Tuesday the Fed stands ready to raise rates to fight inflation.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

BEIJING (AP) — Global stocks and Wall Street futures advanced Wednesday after Federal Reserve chairman Jerome Powell said U.S. monetary policy would return to normal and interest rates might be raised earlier than planned.

London and Frankfurt opened higher. Shanghai, Tokyo and Sydney advanced.

Wall Street’s benchmark S&P 500 index rose 0.9% on Tuesday after Powell said policy “in all likelihood” will return to normal as bond purchases and other stimulus wind down. Speaking before the Senate Banking Committee, he said ultra-low rates might be raised earlier than planned if necessary to cool inflation that is at a four-decade high.

“Wall Street now has a better understanding on how the Fed will normalize policy,” Edward Moya of Oanda said in a report. “After Powell’s testimony, some investors feel they got the all-clear signal to buy the dip.”

In early trading, the FTSE 100 in London rose 0.5% to 7,529.16. The DAX in Frankfurt advanced 1.1% to 15,941.81. The CAC 40 in Paris added 1% to 7,183.38.

On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were up 0.2%.

On Tuesday, the S&P 500 broke a five-day series of declines and rose 0.9%. The Dow gained 0.5% and the Nasdaq composite advanced 1.4%.

In Asia, the Shanghai Composite Index gained 0.8% to 3,595.12 and the Nikkei 225 in Tokyo rose 1.9% to 28,765.66. The Hang Seng in Hong Kong gained 2.6% to 24,354.68.

The Kospi in Seoul added 1.5% to 2,972.48 and Sydney’s S&P-ASX 200 was 0.7% higher at 7,438.90.

India’s Sensex opened up 0.8% at 61,102.89. New Zealand retreated while Southeast Asian markets gained.

Investors were rattled in mid-December when Fed officials said they would accelerate plans to wind down stimulus that is boosting stock prices. They have been trying to figure out how the world’s biggest economy and financial markets will react.

Also Tuesday, the World Bank cut its forecast for global economic growth this year to 4.1% from 4.3% due in part to supply chain disruptions that fueled inflation. The agency estimates the world economy grew by 5.5% in 2021.

On Wednesday, the U.S. government is due to report consumer inflation. That is followed Thursday by an index of wholesale prices.

In energy markets, benchmark U.S. crude rose 2 cents to $81.24 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.99 on Tuesday to $81.22. Brent crude, used as the price basis for international oils, lost 11 cents to $83.61 per barrel in London. It gained $2.85 the previous session to $83.72.

The dollar edged down to 115.34 yen from Tuesday’s 115.37 yen. The euro edged down to $1.1364 from $1.1366.