By Geoffrey Smith
Investing.com -- U.S. stock markets opened higher on Wednesday, with the risk environment looking increasingly benign after published details of the Democrats’ new spending plans indicated no dilution of the administration’s $1.9 trillion coronavirus relief package.
The ongoing feverish speculation by retail traders meanwhile has definitively moved from last week’s heavily shorted names and is now focusing on cannabis stocks, in anticipation of legalization measures in the U.S. and Mexico.
By 9:40 AM ET (1440 GMT) the Dow Jones Industrial Average was up 99 points, or 0.3%, at 31,475 points. The S&P 500 was up 0.4% and the Nasdaq Composite was up 0.5%.
The hottest movers were all pot names, with Tilray (NASDAQ:TLRY) stock and Sundial Growers (NASDAQ:SNDL) stock both gaining 33%, while Aphria (NASDAQ:APHA) stock was up 17.5% and Canopy Growth (NASDAQ:CGC) stock gained 13.5%.
Earlier, inflation data for January had passed off without any noticeable sign of nascent price pressures, allaying any nascent fears about the Federal Reserve moving to tighten monetary policy sooner than thought. The consumer price index rose 0.3% and the annual rate of inflation edged up to 1.4%, but core CPI, which strips out more volatile elements, was flat and the annual rate fell to 1.4% from 1.6%.
Analysts still expect inflation to accelerate to 3% or more over the rest of the year, not least due to the heavy basis effect that last year's collapse in fuel and energy prices will create. However, Fed officials have promised to 'look through' any volatility in the short-term headline rate until unemployment has fallen decisively from today's elevated levels.
Twitter (NYSE:TWTR) stock also stood out with an 11.4% gain after saying the year had started strongly for advertising revenue. That followed a banner quarter in which traffic was sustained by the presidential election and all that followed. Twitter's chief financial officer confirmed the network doesn't intend ever to readmit ex-President Donald Trump.
LYFT (NASDAQ:LYFT) also gained 8.0% to its highest in 18 months after saying it expects to turn a profit as early as the third quarter of this year. The expected rebound in the ride-hailing business also lifted Uber (NYSE:UBER) stock 4.7% to a new all-time high ahead of its earnings report, which is due after the closing bell.
Elsewhere, General Motors (NYSE:GM) stock fell 5.1% after it warned of potential production bottlenecks arising from a shortage of semiconductors for an industry that has been wrong-footed by the relatively quick rebound in demand since the pandemic peaked. That contrasted with Toyota (NYSE:TM) ADRs, which rose 2.2% to a fresh all-time high after it revised its profit guidance for the year through March higher.