Stocks rose Wednesday after November’s inflation report met economists’ projections, clearing the way for the Federal Reserve to cut interest rates again at its December meeting next week.
November’s consumer price index, which tracks a basket of goods and services, was in line with expectations. The reading showed a 0.3% rise from October and 2.7% increase from a year ago. Excluding volatile food and energy prices, core CPI increased 0.3% on the month and 3.3% on an annual basis.
While this inflation data represented a quicker pace from the prior month, traders speculated it was still not high enough to keep the Fed from cutting rates at its next gathering. Fed funds futures are pricing in a more than 87% likelihood that the central bank lowers rates at that gathering, according to CME’s FedWatch Tool.
“Today’s inflation report likely confirms a Fed policy cut next week but, with monthly core inflation hitting its strongest rate since the inflation scare of early 2024, price pressures are hardly settling at a level that the Fed can be completely at ease with,” said Seema Shah, chief global strategist, Principal Asset Management.
The market rebounded Wednesday from a losing day in the prior session, as Tuesday marked the second straight down day for the S&P 500 and Nasdaq Composite and fourth negative session in a row for the Dow.
Nvidia, Tesla and other bull market leaders led the gains following the relatively tame inflation data.
