Wall Street Waits in Anticipation: Inflation Report Aligns with Predictions, Eyes on Fed Decision
Wall Street cautiously responded to a 3.1% inflation report, closely aligned with forecasts, ahead of the Federal Reserve's upcoming rate decision.
New York,: Wall Street was cautious on Tuesday, displaying minimal fluctuations following a closely watched inflation report. The report, aligning with economic forecasts, indicated a 3.1% increase in consumer prices for essentials, marginally down from October’s 3.2%. This alignment with analysts’ expectations suggests a steady course ahead of the Federal Reserve’s critical interest rate decision.
In the stock market, the S&P 500 showed remarkable resilience, remaining unchanged after reaching a 20-month high. The Dow Jones industrial average saw a modest rise of 76 points or 0.2%, and the Nasdaq composite edged up by 0.1%.
Among notable stock movements, Oracle experienced a significant 10.5% drop in its stock value following a revenue shortfall in its latest quarter. Conversely, Icosavax witnessed a dramatic surge of 48.5% after news of AstraZeneca’s acquisition plans emerged, potentially raising its value to at least $838 million.
The Federal Reserve, having already raised the main interest rate to over 5.25%, the highest since 2001, awaits its next meeting conclusion on Wednesday. This meeting is crucial as it could signal whether the Fed maintains its rate or adjusts it, influencing the trajectory of the economy and investment markets. Recent optimism hints at a potential interest rate cut in 2024, possibly as early as March, a move that could rejuvenate the stock market and bolster the broader economy.
Traders, in response to the inflation report, have modestly increased bets on a rate cut by March, though a minority remains wary, predicting prolonged high rates. Seema Shah of Principal Asset Management noted a slight uptick in inflation from October to November, casting doubt on the market’s easing expectations amidst a robust job market.
Analysts predict Federal Reserve Chair Jerome H. Powell may temper expectations of early rate cuts, considering the current economic data. In the bond market, Treasury yields held steady, reflecting the market’s cautious response to the inflation figures.
In other market developments, Choice Hotels International’s share price declined by 1.7% after announcing a direct buyout offer for Wyndham Hotels & Resorts. Hasbro’s shares also dropped by 2.6% following an announcement of further job cuts.
On a positive note, Centene’s shares climbed 4.4%, bolstered by its optimistic earnings forecast for 2024 and a new $4 billion stock buyback program.
Internationally, European markets showed stability, while Asian markets mostly recorded gains. In London, the FTSE 100 marginally increased after reports of slowing wage growth, a factor that could influence the Bank of England’s upcoming interest rate decision.
Lastly, a dip in crude oil prices to $69.14 per barrel relieved some inflationary pressure, reflecting global economic concerns over demand and supply imbalances.
