US STOCKS-Wall Street gains as hot inflation data meets expectations
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* Annual CPI growth hits highest level in more than 39 years
* Oracle leaps on upbeat quarterly results, outlook
* Broadcom gains on buyback plan announcement
* Indexes up: Dow 0.34%, S&P 0.62%, Nasdaq 0.35% (New throughout; changes dateline to NEW YORK, changes byline)
By Stephen Culp
NEW YORK, Dec 10 (Reuters) - Wall Street was modestly higher on Friday, with stocks pulling back from earlier highs as market participants digested hot inflation data, which while in line with expectations also notched the largest annual increase in consumer prices in nearly four decades.
All three major U.S. stock indexes were green, with tech shares doing the heavy lifting.
The indexes were on track to end higher than last Friday's close, with the benchmark S&P 500 on track to post its biggest weekly percentage advance since February, as jitters over the Omicron coronavirus variant faded and stocks edged back toward record highs.
A report from the Labor Department showed consumer prices surged last month to a 6.8% annual growth rate, the highest reading in more than 39 years.
"There was a lot of anticipation we were going to see a big number," said Tim Ghriskey, senior portfolio strategist at Inverness Counsel in New York. "I don’t think the market is surprised."
Persistent inflation due to ongoing supply-chain challenges suggests the U.S. Federal Reserve could very well start tightening its accommodative monetary policy sooner than many might have hoped.
"Clearly, it’s being driven primarily by supply-chain issues," Ghriskey added. "But it appears these issues could be easing, and over time we should see them moderate. And that should take the foot off the inflation accelerator."
A Reuters poll of economists sees the central bank hiking key interest rates from near zero to 0.25-0.50% in the third quarter of next year, followed by another in the fourth quarter.
The Fed is expected to convene next week for its two-day monetary policy meeting, which market participants will be scrutinizing for any clues regarding those rate increases along with the pace at which it will taper its bond purchases.
"Elevated inflation is already priced in to the market," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. "But this does mean we’re probably going to be faced by a more hawkish Fed and a change in monetary policy is likely to happen in the latter part of the second quarter of 2022."
The Dow Jones Industrial Average rose 122.25 points, or 0.34%, to 35,876.94, the S&P 500 gained 29 points, or 0.62%, to 4,696.45 and the Nasdaq Composite added 54.19 points, or 0.35%, to 15,571.56.
Most of the 11 major sectors in the S&P 500 were higher, with consumer staples and technology enjoying the biggest jump.
Energy stocks were down the most.
Shares of software firm Oracle Corp jumped 15.8% after it forecast an upbeat third-quarter outlook.
Broadcom Inc jumped 7.1% following the chipmaker's announced a $10 billion share buyback plan.
Elon Musk, chief executive of Tesla Inc, tweeted that he is "thinking of quitting my jobs & becoming an influencer full-time." The electric car maker's stock was up 1.2%.
Declining issues outnumbered advancing ones on the NYSE by a 1.29-to-1 ratio; on Nasdaq, a 1.57-to-1 ratio favored decliners.
The S&P 500 posted 33 new 52-week highs and 1 new low; the Nasdaq Composite recorded 25 new highs and 130 new lows. (Reporting by Stephen Culp in New York Additional reporting by Devik Jain, Shreyashi Sanyal and Bansari Mayur Kamdar in Bengaluru Editing by Matthew Lewis)
