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U.S. stocks rose as traders digested October inflation numbers that were in line with estimates.
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Consumer prices rose 2.6% annually last month and 0.2% monthly.
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Traders have increased their bets on another quarter-point rate cut by the Federal Reserve in December.
US stocks rose on Wednesday as traders learned new inflation figures, which were in line with economists’ expectations. Major indexes rose in morning trading, while bond yields fell.
Consumer prices grew 0.2% in the month of October and 2.6% year over year. The increase was slightly larger than last month’s 2.4% price growth, but was in line with expectations, keeping investors hopeful that the Federal Reserve will cut interest rates at its meeting. December.
Expectations of another 25 basis point rate cut in December solidified. Markets are pricing in an 82% chance that the Federal Reserve will cut its target rate by another quarter point, up from 59% yesterday, according to the CME FedWatch tool.
“Given nervousness around the more inflationary aspects of Trump’s policy proposals, markets seemed primed for an inflationary surprise to the upside today,” Seema Shah, chief global strategist at Principal Asset Management, said in a note. “A cut in December is still at stake,” he added.
Still, the rising headline inflation rate makes the prospects for future Federal Reserve cuts uncertain, according to Skyler Weinand, chief investment officer at Regan Capital.
“With Wednesday’s CPI in line with expectations but still stubbornly above the Fed’s 2% target, the Fed may only have one rate cut left in December before pausing its tracks. of easing,” Weinand said in a note.
He continued: “The incredible move in the stock market after the election has effectively eased financial conditions for stock investors. This easing, combined with incoming fiscal stimulus, may justify a pause in rate cuts by the Reserve in the near future to allow the dust to settle.” and process more incoming data.”
Assets that are part of the Trump Trade appeared to remain in the spotlight on Wednesday, with Tesla shares rising as much as 3% while Dogecoin rose 4% after Elon Musk was named co-director of the newly created Department of Government Efficiency of Trump, along with businessman Vivek Ramaswamy.
Here’s where U.S. indices stood shortly after the 9:30 a.m. opening bell on Wednesday: