Wall St gains on US retail, inflation data

Wall Street's main indexes have risen after weak retail sales and further evidence of slowing inflation supported hopes of smaller rate hikes by the Federal Reserve while Tesla shares gained for the second straight day.

A reading from the US Commerce Department showed retail sales fell 1.1 per cent in December against expectations of a 0.8 per cent drop, while a separate report showed producer prices declined more than expected in December.

"The market is getting what it wants, which is the slowing in inflation, which means that the Fed can (hike) at a slower rate and maybe have a lower endpoint," said Tom Martin, senior portfolio manager at GLOBALT in Atlanta.

Traders' bets of a 25-basis point rate hike rose after the data while US 10-year Treasury yields fell to a four-month low.

Focus also remains on the earnings season as it gathers pace to gauge the strength of US corporations against the backdrop of higher interest rates.

Analysts now expect year-over-year earnings from S&P 500 companies to decline 2.6 per cent for the quarter, according to Refinitiv data, compared with a 1.6 per cent decline in the beginning of 2023.

Tesla Inc rose 1.5 per cent for the second straight session as analysts noted the electric-vehicle maker's recent price cuts to top models gave it a competitive edge.

Also boosting the S&P 500 and Nasdaq, Microsoft Corp rose 0.2 per cent after the company said it would cut 10,000 jobs by the end of the third quarter of fiscal 2023.

Among major S&P 500 sectors, consumer discretionary stocks were up 1.0 per cent, leading gains.

US stock markets have started 2023 on a strong footing on hopes that a moderation in inflationary pressures could give the Fed cover to dial down the size of its interest rate hikes.

St Louis Fed President James Bullard said on Wednesday interest rates need to go over 5.0 per cent at least, echoing views by several other policymakers in recent weeks.

In early trading, the Dow Jones Industrial Average was up 63.78 points, or 0.19 per cent, at 33,974.63, the S&P 500 was up 14.36 points, or 0.36 per cent, at 4,005.33, and the Nasdaq Composite was up 73.86 points, or 0.67 per cent, at 11,168.98.

Among other stocks, United Airlines Holdings Inc rose nearly 1.0 per cent as it forecast at least a four-fold jump in full-year profit, lifting the S&P 1500 airlines index .

Moderna Inc rose 7.8 per cent after reporting data which demonstrated the effectiveness of its respiratory syncytial virus (RSV) vaccine.

IBM Corp was a drag on the Dow, falling 1.3 per cent after Morgan Stanley downgraded the company's shares to "equal weight" from "overweight" citing slowing revenue growth.

PNC Financial Services Group Inc fell 5.5 per cent after the company missed estimates for fourth-quarter profit.

Advancing issues outnumbered decliners for a 3.96-to-1 ratio on the NYSE and a 2.60-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and no new low while the Nasdaq recorded 47 new highs and four new lows.