By Georgi Kantchev and Amrith Ramkumar 

The Dow Jones Industrial Average and S&P 500 edged higher Wednesday after data showed consumer prices rose in October in line with expectations, easing some anxiety about higher inflation leading to a faster pace of interest-rate increases.

The Dow industrials climbed 45 points, or 0.2%, to 25332, while the S&P 500 also added 0.2%. Both indexes tumbled Monday, then erased early advances to close lower Tuesday. The tech-heavy Nasdaq Composite was recently up 0.1% after rising about 1% shortly after the opening bell.

Concerns that rising inflation would make the Federal Reserve more aggressive in tightening financial conditions have contributed to recent stock-market volatility, analysts say. Higher rates make some investors more cautious about seeking greater returns in risk assets such as stocks and lead to higher borrowing costs, crimping corporate profits.

Although Wednesday's numbers showed consumer prices rose last month at the fastest pace since the beginning of the year, the increase was driven largely by gas prices. That is one reason some analysts expect the recent slump in oil prices to lead to moderating inflation moving forward, potentially keeping the Fed on its gradual path of rate increases.

"If inflation stays relatively benign, and I think it will, growth will slow, but there's no reason why growth should stall," said David Kelly, chief global strategist at J.P. Morgan Asset Management

Still, some investors expect recent swings in financial markets to continue, with oil prices recently plummeting into a bear market and uncertainty about the U.S.-China trade relationship also lingering.

Stocks had trimmed some of their sharp October declines last week before falling Monday as investors monitored signs of slowing global growth and peaking corporate earnings. Economic data in Europe and China added to those concerns Wednesday, analysts said.

Germany's economy shrank for the first time in 3 1/2 years in the third quarter while overall eurozone annualized growth was 0.7% over the quarter, its lowest rate since 2013.

In China, business activity was mixed in October, as retail sales grew at the slowest pace in five months, while growth in industrial output and investment accelerated.

The data came as investors watched for the latest moves in the trade spat between U.S. and China. The countries have renewed talks on trade ahead of a meeting between President Trump and President Xi Jinping, set for the end of November at the Group of 20 nations summit in Buenos Aires.

"There are a lot of issues out there: geopolitics, oil, trade wars, Brexit, take your pick," said Eric Stein, co-director of global income at Boston-based Eaton Vance. "It means more volatility is in store for the foreseeable future."

Some analysts remain anxious that tariffs will also impact inflation moving forward and the Fed's path of rate increases.

Oil prices stabilized Wednesday, with U.S. crude up more than 2% and on track to end a record 12-session losing streak, lifting energy stocks.

Shares of industrial stocks that have been hurt by rising input costs were also among the market's leaders.

But swings in technology and internet stocks continued, with Apple extending a recent slide and Netflix falling more than 1%.

Macy's was also an S&P 500 laggard, sliding more than 4% following its earnings report even after it delivered healthy sales growth in its latest quarter and raised its guidance for the year. Investors will parse Thursday retail sales data for the latest reading on consumer spending ahead of the holiday season.

The yield on the benchmark 10-year U.S. Treasury note climbed to 3.154%, according to Tradeweb, from 3.145%. Yields rise as bond prices fall. The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was recently down 0.1%.

In Europe, the Stoxx Europe 600 was down 0.3%. Investors were watching the latest developments in the Brexit negotiations after Britain and the European Union on Tuesday hammered out a draft deal on the U.K.'s exit from the bloc.

In Asia, Hong Kong's Hang Seng fell 0.5% while Japan's Nikkei Stock Average was up 0.2%. China's benchmark Shanghai Composite Index fell 0.9%.

Write to Georgi Kantchev at georgi.kantchev@wsj.com and Amrith Ramkumar at amrith.ramkumar@wsj.com

(END) Dow Jones Newswires

November 14, 2018 11:11 ET (16:11 GMT)

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