By Geoffrey Smith
Investing.com -- U.S. stock markets opened higher on Wednesday as a relatively weak retail sales report for February encouraged hopes that the Federal Reserve won't talk too tough after its policy meeting which ends later in the day.
Official data showed that retail sales rose only 0.3% last month rather than the 0.4% expected, while there was a bigger shortfall in core retail sales, where growth of 0.2% was well below expectations of 0.9%. While the monthly numbers are still erratic due to shifting consumption patterns caused by successive waves of the pandemic, they appear to indicate a slowdown from the much more robust spending last year, when households were still enjoying the benefits of stimulus checks.
By 9:40 AM ET (1340 GMT), the Dow Jones Industrial Average was up 460 points, or 1.4% at 34,004 points, the first time it has traded above 34,000 in nearly two weeks. The broader-based S&P 500 was up 1.4% and the Nasdaq Composite was up 1.8%.
The early mood was also lifted by events abroad, with Russia's Foreign Ministry appearing to make further concessions in peace talks with Ukraine and China's government and central bank intervening verbally to prop up local stock markets after a dismal last few trading sessions. Chinese ADRs advanced broadly, with Alibaba ADRs (NYSE:BABA) gaining 16%, Pinduoduo ADRs (NASDAQ:PDD) gaining 34% and JD.com (NASDAQ:JD) ADRs gaining 21%.
The day is, however, set to be dominated by the Federal Reserve's meeting and Chairman Jerome Powell's press conference at 2:30 PM ET. A 25 basis point rate hike - the first in over three years - is widely expected, with a minority still betting on a 50 basis point hike. The latter would signal greater urgency in bringing down an inflation rate that is running at its highest in over 40 years. Of most importance, however, will be the Fed's guidance in the form of its so-called 'dot-plot' of future rate expectations, and in the guidance offered by Powell.
Powell is likely to highlight not only the inflationary impact of past stimulus and current labor market tightness, but also the risks to growth from sustained high energy prices and global economic disruption due to Russia's invasion of Ukraine. Ukraine's President Volodymyr Zelensky earlier made a virtual address to Congress, calling again for a No-Fly Zone over Ukraine. The Biden administration has rejected that on the grounds that it would lead directly to military conflict between the U.S. and Russia, the world's two biggest nuclear powers.
Among individual movers early on, Starbucks (NASDAQ:SBUX) stock surged 7.4% after it said that Chief Executive Kevin Johnson will step down at the end of the month, to be replaced as interim CEO by his predecessor - now chairman - Howard Schultz. Chipmakers NVIDIA (NASDAQ:NVDA) and Micron (NASDAQ:MU) also stood out after receiving brokerage upgrades: Nvidia stock rose 4.0% and Micron stock rose 7.1%.
Among the few losers, NortonLifeLock (NASDAQ:NLOK) fell 10.2% after the cybersecurity firm made an $8.6 billion bid for U.K.-based software group Avast (LON:AVST). The U.K.'s antitrust regulator signaled it will investigate the transaction. Lockheed Martin (NYSE:LMT) stock also fell 6.2% after Bloomberg News reported that the Pentagon will trim its order for F-35 aircraft next year by 33. It's not clear whether the reduction in the order is linked to developments in Europe, where Germany committed to buying a similar amount of F-35s in an urgent upgrade of its airforce earlier this month.