Market Pulse: Fresh Inflation Data Keeps Fed on Track for Rate Cut
The US stock market experienced a mixed opening on Wednesday, as investors digested the latest consumer inflation data. The Dow Jones Industrial Average edged up 0.1%, while the S&P 500 and Nasdaq Composite slipped into the red, down 0.1% and 0.3%, respectively.
Inflation Remains on Track
The Consumer Price Index (CPI) rose 2.6% year over year and 0.2% month over month, meeting forecasts. Core inflation, which excludes food and energy prices, increased 3.3% year over year and 0.3% month over month, also in line with expectations. This data suggests that the Federal Reserve is likely to proceed with another rate cut in December, as 80% of traders expect, according to the CME FedWatch tool.
Fed’s Focus on Inflation
Minneapolis Fed President Neel Kashkari emphasized the importance of inflation data in the coming weeks, stating that any surprise to the upside could give the central bank pause. With inflation taking center stage, investors are closely watching the Fed’s next move, which could impact borrowing costs and the overall economy.
Tesla and Rivian in the Spotlight
Tesla’s stock erased earlier gains, attempting a comeback from a 6% fall on Tuesday, after President-elect Donald Trump named CEO Elon Musk to co-lead a new Department of Government Efficiency. Meanwhile, Rivian’s shares jumped double digits after Volkswagen raised its investment in the rival electric carmaker to $5.8 billion.
Economic Uncertainty Ahead
Despite the positive inflation data, economists warn of potential inflation resurgence following Trump’s election. His proposed policies, including high tariffs, tax cuts, and curbs on immigration, could lead to higher inflation and impact the economy. As a result, investors are cautious, awaiting further guidance from the Fed and the new administration.
Market Themes
Today’s key economic and market themes include the release of fresh consumer inflation data, Spirit Airlines’ plummeting stock amid bankruptcy concerns, and US mortgage rates continuing their post-election climb. Additionally, SoftBank Group plans to build a supercomputer using Nvidia’s new Blackwell chips, underscoring its ambitions in AI.
Leave a Reply