Stock futures rise ahead of inflation press

Stock futures rise ahead of inflation press

Stock futures rise ahead of inflation press

US stocks reeled during midday trading, trimming gains from a burst to the upside on Tuesday that was triggered by new inflation data showing prices rose less-than-expected last month.

The S&P 500 (^GSPC) advanced 0.3%. The Dow Jones Industrial Average (^DJI) slipped 0.1% during midday trading, giving up a 2% gain from the start of the session. The tech-heavy Nasdaq Composite (^IXIC) gained 0.2%.

The stock’s jump comes after data from the BLS showed prices in November rose 0.1% month-on-month and 7.1% year-over-year. Tuesday’s data was seen by investors as potentially encouraging for the Federal Reserve to ease its aggressive rate hikes early next year.

“While this is the second consecutive month of weaker-than-expected inflation, we don’t think that will change anything at tomorrow’s Fed meeting. We still expect a 50 basis point hike, but what matters is guidance,” Gina Bolvin, president, Bolvin Wealth Management Group, wrote in a statement following the inflation data.

Following the inflation data and during the subsequent stock rally, the dollar tumbled against most major currencies and bitcoin (BTC-USD) soared as much as 5% to approach $18,000.

Yields were also down, with the 10-year Treasury yield falling as much as 16 basis points to 3.45% early Tuesday.

Stocks had rallied on Monday before the inflation report, with the S&P 500 gaining 1.43% to kick off the new week, with energy, utilities and technology outperforming.

The rally continued early Tuesday as consumer price data was cooler than expected: economists polled by Bloomberg had expected the headline CPI to rise 7.3% year on year and 0.3% % from the previous month.

Meanwhile, core CPI excluding volatile food and energy components rose 6.0% year-on-year, down from the 6.1% year-on-year increase seen in October. The data is the last piece of the puzzle before the Fed’s 2022 final policy meeting, in which the central bank is expected to raise its key interest rate by another 0.50%.

“In fact, we don’t have many important days like the next two, and the US CPI today and the FOMC tomorrow will likely be the difference between a big Santa rally and a visit from Scrooge before Christmas,” Jim Reid and colleagues of Deutsche Bank wrote in an early morning note Tuesday.

In commodity markets, oil prices were higher, with WTI crude up more than 3% at around $75.76 a barrel, boosted by China’s easing of COVID-related restrictions.

On the corporate news front, United Airlines (UAL) has placed an order for 100 of Boeing’s top-of-the-line 787 Dreamliners with the option to purchase 100 more, according to a press release. Shares of United Airlines fell nearly 7% on the news.

Elsewhere in the cryptocurrency world, Sam Bankman-Fried, founder and former CEO of bankrupt cryptocurrency exchange FTX, was arrested in the Bahamas on Monday after the US filed a criminal complaint.

Dani Romero is a Yahoo Finance reporter. Follow her on Twitter @daniromerotv

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