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Wall Street gains on easing producer prices, Target's upbeat forecast

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Updates with preliminary closing prices 4 p.m. ET/2100 GMT

By Sinéad Carew and Sruthi Shankar

Nov 15 (Reuters) -U.S. stocks closed slightly higher on Wednesday, as fresh inflation data reinforced investor hopes that the Federal Reserve is done raising interest rates, while retail stocks were boosted by an upbeat forecast from Target TGT.N.

Shares in Target TGT.N surged after the retailer forecast a fourth-quarter profit largely above expectations on easing supply-chain costs.

Target's bright outlook lifted shares of other retailers including Macy's M.N and Kohl's KSS.N. The S&P 500 consumer staples index .SPLRCS, which includes Target, was among the top sector gainers throughout the session.

Stocks had rallied on Tuesday after a softer-than-expected consumer price index (CPI) reading boosted optimism that the Fed mightbe able to avoid raising rates further.

Additional data on Wednesday showed the biggest decline in producer prices in 3-1/2 years in October on the back of cheaper gasoline, offering more evidence of easing price pressures.

Also on Wednesday, retail sales data showed a smaller-than-expected decline of 0.1% in October, against forecasts of a 0.3% fall, according to economists polled by Reuters.

"Those two data points reaffirmed the message from Tuesday that the Fed seems to be navigating the soft landing quite well," said Ronald Temple, chief market strategist at Lazard.

After the big move in Wall Street's three major indexes in the previous session, Temple said Wednesday's data "doesn't change the narrative."

The Russell 2000 .RUT index advanced again, after closing 5.4% higher on Tuesday, as the prospect of stalling rate hikes provides particular relief to smaller companies, which are more dependent on floating rate loans.

According to preliminary data, the S&P 500 .SPX gained 7.92 points, or 0.18%, to end at 4,503.62 points, while the Nasdaq Composite .IXIC gained 14.88 points, or 0.11%, to 14,109.26. The Dow Jones Industrial Average .DJI rose 170.07 points, or 0.49%, to 34,997.77.

The benchmark S&P 500 .SPX and tech-heavy Nasdaq .IXIC had posted their biggest daily percentage gains in more than six months on Tuesday, after the consumer prices data.

Money market traders have fully priced in odds that the U.S. central bank will keep rates steady in December, as per CME Group's Fedwatch tool. They also see the first rate cut of the cycle to kick off in May 2024.

Investors were also watching for the outcome of the first meeting in a year between U.S. President Joe Biden and Chinese leader Xi Jinping on Wednesday, hoping the talks could ease friction between the superpowers on military conflicts, drug-trafficking and artificial intelligence.

Further aiding the mood, the U.S. House of Representatives passed a temporary spending bill that would avert a government shutdown, with broad support from lawmakers from both parties.

To prevent a shutdown, the Senate and Republican-controlled House must enact a legislation that Biden can sign into law before current funding for federal agencies expires at midnight on Friday.

Among individual stocks, Walt Disney DIS.N roseafter reports thatactivist investor ValueAct Capital had acquired a stake in the entertainment company.

TJX TJX.N shares fell after it forecast current-quarter profit below Wall Street expectations, signaling that spiraling costs were weighing on the off-price retailer's margins.

Sirius XM SIRI.O shares rallied after Warren Buffett's Berkshire Hathaway BRKa.N took a stake in the audio entertainment company.

Reporting by Sinéad Carew in New York, Sruthi Shankar and Amruta Khandekar in Bengaluru; Editing by Shinjini Ganguli, Maju Samuel, Pooja Desai and Richard Chang


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