Wall St inches up after November inflation data
Inflation Data and Rate Cut Expectations
Wall Street’s main indexes inched higher on Tuesday in response to November’s inflation data, which kept expectations of a rate cut in May intact. Investors anticipated the Federal Reserve’s policy decision later in the week.
The November Consumer Price Index (CPI) rose 3.1% on an annual basis, aligning with estimates from economists polled by Reuters. Additionally, core prices, excluding volatile items such as food and energy costs, also matched expectations by rising 4% annually.
On a month-on-month basis, consumer prices saw a 0.1% increase in November, contrary to estimates of remaining unchanged.
Market Response and Fed’s Rate Decisions
Traders adjusted their earlier bets regarding interest rate cuts by the Fed, with expectations shifting from March to the U.S. central bank’s May meeting as the likeliest start for rate reductions. Bets of at least a 25-basis point rate cut in March decreased to 43.7% from about 50% before the inflation data was released, according to the CME Group’s FedWatch tool.
Analysts emphasized the Fed’s potential approach, with Jason Pride, chief of investment strategy and research at Glenmede, indicating that the equity markets might face challenges in the near term. The focus remained on the Fed’s interest rate verdict at the end of its two-day meeting, scheduled for Wednesday, as well as the producer price index (PPI) data for November. The European Central Bank and the Bank of England are also expected to deliver their policy verdicts later this week.
Stock Market Performance
Oracle fell 11.1% as the cloud services provider forecast third-quarter revenue below estimates due to slowing demand for its cloud service. The energy sector lagged, shedding 1.4% as crude prices slid over 3%. Google-parent Alphabet lost 0.8%, while “Fortnite” maker Epic Games prevailed in its high-profile antitrust trial over the company.
Other growth stocks witnessed mixed performance, with Tesla declining by 1.8% and Meta Platforms gaining 1.2%. Chipmaker Broadcom’s shares also boosted the benchmark index, adding 3.5% and hitting a fresh record-high level. Lucid declined by 9.4% after the electric-vehicle maker’s CFO Sherry House stepped down, while Airbnb fell 2.0% as Barclays downgraded the rental firm’s shares to “underweight” from “equal weight.”
Market Index and Movements
At 11:43 a.m. ET, the Dow Jones Industrial Average was up 116.21 points, the S&P 500 was up 5.53 points, and the Nasdaq Composite was up 30.94 points. Declining issues outnumbered advancers, while the S&P index recorded 63 new 52-week highs and one new low, and the Nasdaq recorded 81 new highs and 108 new lows.
Disclaimer:
The above stock analysis is for informational purposes only and should not be considered as investment advice. Consult with a professional financial advisor before making any investment decisions.
