Wall St gains from upbeat forecasting

Wall Street was set to rise at the open yesterday, after data showed consumer prices did not overheat in November, quelling inflation worries ahead of a statement from the Federal Reserve that will be scrutinised for clues on the state of the world’s largest economy.

The Labor Department said the Consumer Price Index rose 0.4 per cent on a seasonally adjusted basis after an unrevised 0.3 per cent gain in October.

“This could be a little bit of a relief since we’ve seen some inflationary numbers lately,” said John Massey, portfolio manager at AIG SunAmerica Asset Management in Jersey City.

On Tuesday, the government said US producer prices jumped a surprising 1.8 per cent last month, and industrial output rose firmly, sparking inflation jitters in financial markets.

Separately, data showed last night that housing starts rose to a seasonally adjusted annual rate of 574,000 units in November at the fastest rate since May, and building permits increased at their fastest clip since November 2008.

The Federal Open Market Committee will end a two-day policy-setting meeting later last night that it is likely to show central bank officials are more upbeat about the economy, but not enough to tighten loose borrowing costs that have encouraged risk-taking, economists say.

“I expect more of the same from today’s Fed comments,” Massey said. “I think they’ll talk up continued low interest rates and economic healing. I don’t think expect them to change their tune,” he added.

S&P 500 futures rose 4.2 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 42 points and Nasdaq added nine points.

Shares of Citigroup dropped 2.6 per cent to $3.36 after the bell last night after CNBC reported that the bank’s equity offering priced at $3.15 a share.