World Stock Watch

Market Optimism Soars as Inflation Figures Align with Expectations

The US stock market experienced a surge in confidence on Wednesday as traders digested the latest inflation data, which fell in line with economists’ predictions. The consumer price index (CPI) revealed a 2.6% year-over-year increase and a 0.2% monthly rise, sparking hopes of another interest rate cut from the Federal Reserve in December.

Interest Rate Cut Expectations Solidify

As a result, market expectations for a 25-basis-point rate cut in December have strengthened, with the CME FedWatch tool indicating an 82% chance of such a move. This increase in confidence is attributed to the inflation figures, which have alleviated concerns about the Federal Reserve’s ability to cut interest rates further.

Mixed Reactions from Market Experts

Seema Shah, chief global strategist at Principal Asset Management, believes that the inflation data has reduced the likelihood of an upside surprise, making a December rate cut more plausible. However, Skyler Weinand, chief investment officer of Regan Capital, cautions that the Fed may only have one rate cut left in December before taking a pause from their easing path.

Trump Trade Assets in Focus

Shares of Tesla and Dogecoin experienced significant gains on Wednesday, with Tesla rising as much as 3% and Dogecoin climbing 4% after Elon Musk’s appointment to co-head the newly created Department of Government Efficiency.

Market Snapshot

As of the 9:30 a.m. opening bell on Wednesday, US indexes stood at:

• S&P 500: 5,988.06, up 0.07%
• Dow Jones Industrial Average: 43,988.08, up 0.18% (+77.10 points)
• Nasdaq composite: 19,285.65, up 0.03%

Other Market Developments

• Stock exposure has reached an 11-year high, with investors betting on US stocks as the top-performing asset next year.
• China’s reaction to a trade war is seen as the biggest risk to stocks after Trump’s election victory.
• Dogecoin has surpassed Ford in value, with the total crypto market cap reaching $3 trillion.

Commodities and Bonds

• West Texas Intermediate crude oil declined 1.07% to $67.39 a barrel.
• Brent crude dropped 0.92% to $71.23 a barrel.
• Gold edged up 0.61% to $2,612.10 an ounce.
• The 10-year Treasury yield dropped six basis points to 4.365%.
• Bitcoin climbed 4.29% to $89,642.