Stocks advanced Wednesday after a tame report on consumer prices, which helped quell inflation fears after a jump in prices at the wholesale level.
Consumer prices rose 0.4 percentin November, as expected, amid a jump in energy costs. Core prices, which exclude the volatile food and energy components, were flat.
This came after a report on Tuesday showed producer prices surged 1.8 percent last month.
"Most of these increases will reverse in December/January in the wake of the drop in oil prices," Ian Sheperdson of High Frequency Economics points out in a note to clients. "In short, the downward pressure on core inflation continues," he said.
The inflation readings were being closely watched ahead of the Fed's decision on interest rates, due out at 2:15 pm ET today. While the Fed is expected to hold rates at historic lows, yesterday's jump in producer prices prompted speculation that policy makers may temper their language to keep rates low "for an extended period."
Oil prices rose today, topping $72 a barrel, after a report showed crude inventories dropped by 3.7 million barrels last week. Gold rose to nearly $1,140 an ounce. The dollar declined, unable to push the euro below $1.45.
In the morning's other economic news: Housing starts rose 8.9 percentlast month, though it was less than expected, and mortgage applications rose for a third straight weeklast week.
The U.S. current account deficit widened as expected in the third quarter to $108 billion.
Investors are watching Citigroup today as its secondary offering is expected to price tonight. The buzz is that it will be between $3.30 and $3.35 a share. The other big news related to Citi is that the US has agreed to forgo billions in taxeson its bailout of the banking giant.
Wells Fargoraised about $12.25 billionin its stock offering on Tuesday to help repay a $25 billion bailout received from the U.S. government last year.
General Electric shares rose after Goldman Sachs and JPMorgan raised their price targets on the stock to $20.
Honeywell delivered an outlook that fell short of Wall Street's expectations.
And Intel is facing antitrust charges from the FTC, which accuses the chip giant of using its size to snuff out the competition.
Intel shares fell nearly 2 percent, while shares of rival AMD jumped more than 5 percent.
Adobe Systems delivered a mixed report after the bell: It beat earnings expectations but withheld a 2010 forecast, saying it all depends on the economy.