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US stocks mostly rose on Wednesday, led by Big Tech, as investors digested another month of sticky inflation data that met economists’ expectations and likely pointed to a Federal Reserve interest rate cut next week.
The tech-heavy Nasdaq Composite (^IXIC) jumped about 1.3% as Google parent Alphabet’s (GOOG, GOOGL) shares extended gains to hit a record high, up as much as 4.6%.
The S&P 500 (^GSPC) rose around 0.7%, while the Dow Jones Industrial Average (^DJI) dropped roughly 0.1% in mid-morning trade after initially opening the day higher.
Fresh inflation data out on Wednesday showed consumer prices rose as forecast in November, keeping the Federal Reserve on track to lower interest rates again in December.
The latest data from the Bureau of Labor Statistics showed that the Consumer Price Index (CPI) increased 2.7% over the prior year in November, a slight uptick from October’s 2.6% annual gain in prices. The yearly increase matched economist expectations.
On a “core” basis, which strips out the more volatile costs of food and gas, prices in November climbed 0.3% over the prior month, matching October, and posted an annual rate of 3.3% for the fourth consecutive month.
Earlier on Wednesday, a report that China is considering devaluing its currency sent ripples through global stock markets and boosted the dollar (DX=F). The potential move is seen as a response to higher tariffs promised by President-elect Donald Trump, as a weaker yuan (CNHUSD=X) could make Chinese exports cheaper.
On the corporate front, Macy’s (M) stock somewhat recovered from double-digit losses earlier in the session after the department store chain lowered its full-year profit guidance. The retailer released its third-quarter results after delaying the report while it investigated an employee hiding up to $154 million in expenses.
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Bitcoin mania: Prices leap to trade around $100,700 a token
Bitcoin (BTC-USD) prices rocketed higher on Wednesday to cross the critical $100,00 mark again after November’s CPI report met expectations.
In mid-morning trade, the largest cryptocurrency rose 5% to trade at around $100,700 a token.
Other smaller cryptocurrencies and crypto-adjacent names mimicked bitcoin’s moves to the upside.
Ethereum (ETH-USD) rose nearly 7% to trade around $3,800 a coin.
Meanwhile, shares of MicroStrategy (MSTR), which owns nearly 280,000 bitcoins, climbed around 6%. The company recently announced the purchase of an additional 51,780 bitcoins for $4.6 billion. MicroStrategy’s bitcoin holdings are now worth $16.5 billion.
Coinbase (COIN), which allows crypto trading on its platform, also saw shares rise roughly 6%.
Bitcoin took a breather on Tuesday after prices enjoyed a record-setting rally on the heels of Donald Trump’s presidential win. His coming administration is viewed as generally more friendly to the alternative asset class.
In July, Trump attended a bitcoin conference in Nashville and has since pledged to usher in more supportive regulation. His promises also included appointing a crypto Presidential Advisory Council and replacing current SEC Chair Gary Gensler, who has since announced he will step down on Jan. 20.
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Markets price in all-but-certain rate cut next week
Consumer price increases met expectations in November — but overall, inflation still remains hot.
The sticky nature of the print “is a little disconcerting,” Paul Ashworth, chief North America economist at Capital Economics, wrote on Wednesday. “But we don’t expect it to persuade the Fed to skip another 25bp rate cut at next week’s FOMC meeting.”
Immediately following the report, markets continued to price in another 25 basis point cut at the central bank’s meeting next week, with the odds of a cut rising to 98.1% from about an 89% chance one day prior.
“As markets came into today’s figure with fears of an upside surprise, the in-line number is being received very positively,” wrote Seema Shah, chief global strategist at Principal Asset Management. “But overall, the Fed will be concerned by the very stubborn nature of inflation and will be increasingly cautious about the upside inflation risks that President-elect Trump’s policies may bring.”
Trump’s proposed policies, such as high tariffs on imported goods, tax cuts for corporations, and curbs on immigration are considered by economists to be potentially inflationary. Those policies could further complicate the Fed’s path forward for interest rates.
“We expect the Fed to move off autopilot in January, adopting a more cautious tone, and slowing its pace of cuts to just every other meeting,” Shah said.
Assuming a 25 basis point cut next week, markets are pricing in another two to three cuts in 2025, according to the latest Bloomberg data.
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Stocks open higher as inflation data meets forecasts
US stocks enjoyed broad-based gains early Wednesday as consumer prices rose as forecast in November, cementing bets the Federal Reserve will cut interest rates at its policy meeting next week.
The Dow Jones Industrial Average (^DJI) moved up about 0.2%, while the S&P 500 (^GSPC) jumped nearly 0.5%. The tech-heavy Nasdaq Composite (^IXIC) added to the across-the-board gains, rising roughly 0.8%.
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November inflation data meets forecasts
New inflation data out Wednesday showed consumer prices rose as forecast in November, reflecting another month where price increases made little progress toward the Federal Reserve’s 2% target.
The latest data from the Bureau of Labor Statistics showed that the Consumer Price Index (CPI) increased 2.7% over the prior year in November, a slight uptick from October’s 2.6% annual gain in prices. The yearly increase matched economist expectations.
The index rose 0.3% over the previous month, matching economists’ expectations but higher than the 0.2% seen in October.
On a “core” basis, which strips out the more volatile costs of food and gas, prices in October climbed 0.3% over the prior month, matching October, and 3.3% over last year for the fourth consecutive month.
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