4:14pm: S&P 500 hits highest intraday level since January 2022
The Dow closed Tuesday up 173 points, 0.5%, at 36,578, the Nasdaq Composite added 101, 0.7%, to 14,533 and the S&P 500 improved 21 points, 0.5%, to 4,644. The small-cap Russell 2000 index slid 3 points, 0.2%, to 1,881.
The three major indexes each hit intraday 52-week highs, with the S&P 500 reaching its highest point since January 2022.
Investors reacted to the consumer price inflation rate easing to 3.1% in November, in line with consensus, from 3.2% in October.
″Bulls and bears each have their talking points about the [November] consumer price index, but the fact of the matter was that the number was very consistent with expectations, and thus changes little,” said Adam Crisafulli, founder and president of Vital Knowledge. “The consensus mindset seems eager for a buyable pullback (as underinvested people would like to deploy sidelined capital) which is likely why one doesn’t seem to be happening.”
12:00pm: US stocks rally as investors digest inflation data
Wall Street shrugged asde a tepid open to push higher as traders took the view today's as expected inflation figures keep rate cuts firmly on tracj for 2024.
At midday, the Dow Jones Industrial Average was up 130.04 points, 0.4%, at 36,534.97, the S&P 500 was up 3.34 points, 0.1% at 4,625.78 and the Nasdaq Composite was up 10.89 points, 0.1%, at 14,443.38.
Michael Pearce at Oxford Economics said: "Overall, we expect this report will do little to shift the Fed's recent communications that core inflation remains too strong to contemplate rate cuts anytime soon."
However, he cautioned market expectations of cuts early next year "are likely to be disappointed."
"We see more stubborn wage and core inflation pressures keeping the Fed on a prolonged hold, with cuts likely to be delayed until September."
9:45am: Stocks ease as in line inflation fails to excite
Stocks in New York made a mixed start to trading as in line inflation figures failed to reinvigorate the market ahead of the Federal Reserve’s interest rate decision.
Shortly after the opening bell, the Dow Jones Industrial Average was little changed at 36,394.18, the S&P 500 was down 12.89 points, 0.3%, at 4,609.55 and the Nasdaq Composite was down 24.06 points, 0.2%, at 14,408.43.
“These data won’t change the outcome of the FOMC meeting,” said Ian Shepherdson at Pantheon Macroeconomics.
“We expect Chair Powell to repeat that the Fed is still prepared to hike again if necessary, and he likely will push back in the press conference when asked about the likely timing for the first easing.”
“But the data will tell them what to do, and we expect the core PCE and wages data to push the Fed into easing in the spring,” he said.
Stocks on the move include Oracle which has opened 10.5% lower after its second quarter results disappointed.
9:05am: Stock futures ease slightly after as expected CPI
US stock futures have eased a touch after broadly in line inflation numbers.
The annual consumer price inflation rate cooled as expected last month strengthening the case for the Federal Reserve to once again decide against a rate hike when it announces a decision on Wednesday.
According to the Bureau of Labor Statistics, the headline inflation rate eased to 3.1% in November, in line with consensus, from 3.2% in October.
On a monthly basis, consumer prices were 0.1% higher in November from October, an outcome slightly ahead of consensus.
The annual core inflation rate, excluding food and energy, was unmoved at 4.0% in November, also in line with consensus.
The data comes ahead of the Federal Reserve's final interest rate decision of the year on Wednesday.
The central bank is widely expected to leave the federal funds rate range at 5.25%-5.50%, with a growing consensus that the next move will be a cut at some point next year.
7:00am: US stock futures modestly higher ahead of CPI
US stock futures are pointing to cautious early progress on Wall Street although consumer prices data before the market open will likely dictate the path for equities.
In pre-market trading, futures for the Dow Jones Industrial Average were up 0.1%, while those for the S&P 500 were 0.1% higher and contracts for the Nasdaq 100 futures climbed 0.1%.
Jim Reid at Deutsche Bank explains the inflation readings are “critical to the hard/soft landing debate, as a crucial part of the answer is whether inflation can durably get back to target, which would enable the Fed to ease off from a more restrictive policy stance.”
Deutsche’s US US economists are looking for monthly headline CPI to come in at just +0.07%, supported by another 8% decline in gas prices since October.
That would take the year-on-year rate down to 3.1%.
For core CPI, Deutsche looks for a stronger +0.27% monthly reading, with the year-on-year measure at 4.0%.
If the forecasts are right, then that would push the six-month annualised rate for core CPI down to 2.8%, marking the first sub-3% reading since March 2021.
In company news, Google-parent, Alphabet, is down 1.0% in pre-market trading after losing an antitrust legal battle with Fortnite maker Epic Games.
Hasbro (NASDAQ:HAS) slipped 5.2% on reports it is axing 1,100 jobs after slow trading in the festive period while Oracle is nearly 9% lower after second quarter revenue came in below Street expectations and cloud sales disappointed.