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US stocks closed mixed on Wednesday as investors weighed fresh consumer inflation data that looked to keep the Federal Reserve on pace for another rate cut next month.
The tech-heavy Nasdaq Composite (^IXIC) reversed earlier gains to close down about 0.3% while the benchmark S&P 500 (^GSPC) finished the day just above the flatline. The Dow Jones Industrial Average (^DJI) moved about 0.1% higher.
Meanwhile, bitcoin (BTC-USD) prices continued their move to the upside, briefly touching a new milestone earlier Wednesday after topping a record $93,000 before paring gains.
Consumer prices rose largely as forecast in October, with the Consumer Price Index rising 2.6% year over year and 0.2% on a month-over-month basis, both meeting forecasts. Rises in “core” inflation — of 3.3% year over year and 0.3% month over month — also met estimates.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Inflation has taken center stage again after the post-election rip higher hit a wall. The FOMO market lost some mojo Tuesday as it ponders whether President-elect Donald Trump’s policies could boost inflation as well as the economy. That has helped push Treasury yields higher, promising higher borrowing costs all around.
The report appears to keep the Federal Reserve on track for a December rate cut. Minneapolis Fed president Neel Kashkari told Yahoo Finance that inflation data was the key focus for the central bank in the weeks ahead, saying at Yahoo Finance’s Invest conference that any surprise to the upside “might give us pause.”
According to the CME FedWatch tool, over 80% of traders expect a rate cut in December.
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Nasdaq lags in mixed trading day
US stocks finished Wednesday’s trading session mixed as tech served as the day’s biggest laggard.
The Nasdaq Composite (^IXIC) reversed earlier gains to close down about 0.3%, while the benchmark S&P 500 (^GSPC) finished the day just above the flatline. The Dow Jones Industrial Average (^DJI) moved about 0.1% higher.
The moves come as investors weighed fresh consumer inflation data that looked to keep the Federal Reserve on track to cut rates again in December.
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The Fed signaling fewer rate cuts in 2025 could be ‘fast approaching’ after latest inflation data
New data out Wednesday showed the “core” Consumer Price Index (CPI) increased 3.3% in the month of October, in line with Wall Street’s expectations.
Immediately following Wednesday’s release, markets continued to price in another 25 basis point rate cut in December after the central bank cut rates by that amount last week. Traders currently see a more than 80% chance that the Fed cuts rates by 0.25% next month, up from just under 60% on Tuesday, according to data from CME’s FedWatch Tool.
But there were further signs of stickiness in Wednesday’s release, reminding investors that inflation’s final chug down to the Fed’s 2% target is proving bumpy. This can be seen in our chart of the day, where the three-month annualized rate of inflation moved from 3.1% last month to 3.6% after the October CPI release.
Nationwide’ chief economist Kathy Bostjancic wrote in a note on Wednesday that this trend could make the December meeting a “closer call” than prior meetings.
Looking further ahead, the shaky three-month trend is part of the reason markets have been moving to price in fewer Fed rate cuts in the first half of 2025. As of Wednesday, markets were pricing in two Fed rate cuts by the end of June, down from four seen in early November.
“The inflation data over the past few months have not shown much additional progress, and the election outcome has raised new questions about the path ahead for price growth,” Wells Fargo senior economist Sarah House wrote in a note to clients. “We think the time is fast approaching when the FOMC will signal that the pace of rate cuts will slow further, perhaps to an every-other-meeting pace starting in 2025.”
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What Musk’s DOGE appointment could mean
Yahoo Finance’s Ben Werschkul reports:
President-elect Donald Trump has charged Tesla (TSLA) CEO Elon Musk and former Presidential candidate Vivek Ramaswamy with cutting government spending and “making changes to the Federal Bureaucracy with an eye on efficiency.”
Years of comments from both men suggest they could aim to do much more than slim down Washington. They appear poised to make a run at abolishing huge areas of that bureaucracy entirely.
“99 Federal agencies is more than enough,” Musk posted Tuesday night after Trump’s announcement was made official. That suggests a massive culling of the hundreds of existing agencies, with the Bureau of Alcohol, Tobacco, and Firearms (ATF) and the Education Department already in focus.
Musk later amended his count even lower, overlooking how a government database shows there are 80 agencies that begin with the letter U alone.
Between them, Musk and Ramaswamy have also directly discussed eliminating high-profile areas like the Education Department, the FBI, and the Internal Revenue Service.
Ramaswamy promised the elimination of at least five larger agencies during his run for President last year. He also discussed cutting 90% of the staff at the Federal Reserve during that campaign.
“This will send shockwaves through the system,” Musk was quoted as saying in Tuesday’s release.
But how deep the new heads of this new government efficiency effort will actually aim to cut — and whether they can actually bring any ideas to fruition as they “provide advice and guidance from outside of Government” — remains to be seen.
But they now have President-elect Trump’s formal backing.
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AMD to lay off 4% of workforce: Reports
AMD (AMD) will lay off 4% of its global workforce to focus on more growth initiatives like artificial intelligence, according to multiple reports.
The company, which is viewed as a top rival to AI chip maker Nvidia (NVDA), employed about 26,000 workers as of last year, according to its annual 10-K filing. That would mean just over 1,000 are on the chopping block, although the exact number is currently unclear.
“As a part of aligning our resources with our largest growth opportunities, we are taking a number of targeted steps,” the company said in a statement shared with outlets on Wednesday. “We are committed to treating impacted employees with respect and helping them through this transition.”
The stock dropped around 2% after the announcement. Shares have fallen just over 4.5% since the start of the year.
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Disney earnings on tap
Disney (DIS) will report its fiscal fourth quarter earnings before the bell on Thursday as the company aims to extend recent momentum in streaming and also stabilize demand within its parks business after the segment fell short in its most recent quarter.
Disney adjusted its reporting structure after CEO Bob Iger reorganized the company last year into three core business segments: Disney Entertainment, which includes its entire media and streaming portfolio; Experiences, which encompasses the parks business; and Sports, which includes ESPN networks and ESPN+.
Thursday’s report marks the first time investors will have a chance to digest year-over-year trends of the three core business units.
Here’s how Wall Street expects Disney to perform, according to consensus estimates compiled by Bloomberg:
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Bitcoin briefly tops $93,000
Bitcoin (BTC-USD) touched new milestone on Wednesday — topping a record $93,000 before paring gains.
The cryptocurrency has been at the center of the “Trump trade” following Donald Trump’s White House win last week. Bitcoin has surged more than 30% since the election, frequently touching new daily records.
Other cryptocurrencies also rose including ethereum (ETH-USD), solana (SOL-USD), and even meme coin doge (DOGE-US).
Investors have flocked to bitcoin and other coins under the presumption that Trump will follow through on his pro-crypto campaign promises.
As Yahoo Finance’s Josh Schafer points out, the president-elect has suggested appointing a crypto Presidential Advisory Council, firing SEC Chair Gary Gensler, and creating a “strategic national bitcoin stockpile.”
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Top trenders: Tesla, Rivian, Spirit
Here are some of the top trending tickers on the Yahoo Finance homepage:
Tesla (TSLA): Shares erased earlier gains after initially climbing on the announcement that CEO Elon Musk, along with conservative activist Vivek Ramaswamy, will head up a new Department of Government Efficiency, or DOGE for short. The stock, which fell 6% on Tuesday, has experienced a stellar rally in recent weeks. Shares are up over 30% since the start of the year.
Rivian (RIVN): The stock jumped by double digits after Volkswagen raised its investment in the rival electric carmaker to $5.8 billion. Shares remain under pressure on a year-to-date basis, however — down about 50%.
Spirit Airlines (SAVE): As Ines Ferré reports, the airliner plunged as much as 64% early Wednesday, the most on record, as it explores a deal with creditors to restructure its debt amid a reported threat of bankruptcy after merger talks with Frontier (ULCC) collapsed.
Cava (CAVA): Shares surged on Wednesday, climbing as much as 17% after the fast-casual Mediterranean chain reported third quarter earnings that beat on both the top and bottom lines. Same-store sales growth, which increased by 18% year over year in the quarter, also came in ahead of expectations.
The company lifted its full-year same-store sales forecast as it expects to open more stores than previously guided. Cava said it now expects same-store sales to grow by 12% to 13%, up from the previous 8.5% to 9.5%.
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Food inflation still sticky
Yahoo Finance’s Brooke DiPalma reports:
Food inflation remained sticky in October as select items drove prices higher.
The cost of groceries climbed 1.1% compared to a year ago, per data from the Bureau of Labor Statistics, and 0.1% compared to September. The overall food category increased 2.1%, driven higher by the cost to dine out, which was up 3.8%. The growth in prices of restaurant meals has outpaced the growth in grocery prices in 2024 as rising wages continue to contribute to costs.
Overall, the Consumer Price Index (CPI) increased 2.6% over the prior year in October.
“During the pandemic, we had a tremendous amount of acceleration, and that’s essentially fully back to sort of where it was prior to the pandemic,” BLS economist Steve Reed said of grocery prices.
Egg prices, which are historically volatile, contributed to the stubborn grocery inflation. The item saw a 30.4% year-over-year increase but a 6.4% decline month over month, the largest since April.
Prices of oranges, including tangerines, also boosted overall food prices. The fruit has been affected by drought, extremely high temperatures caused in part by the El Niño climate pattern, and citrus greening, a bacterial disease. Production in Brazil is down 9% year over year, per the US Department of Agriculture.
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Inflation progress ‘a slow grind’ as outlook remains uncertain
New inflation data out Wednesday showed consumer prices rose as forecast in October, keeping the Federal Reserve on track to lower interest rates again in December.
“There is progress on inflation,” Claudia Sahm, chief economist at New Century Advisors, told Yahoo Finance following the data’s release. “We are pointed in the right direction, but it has been a slow grind. And this is another month that fits in that slow grind.”
The outlook remains uncertain as economists warn of another potential inflation resurgence following the election of Donald Trump as the nation’s next president.
Trump and his proposed policies have been viewed as potentially more inflationary due to the president-elect’s campaign promises of high tariffs on imported goods, tax cuts for corporations, and curbs on immigration.
Immediately following Wednesday’s release, markets continued to price in another 25 basis point rate cut in December after the central bank cut rates by that amount last week. Traders currently see a more than 80% chance the Fed cuts rates by 0.25% next month, up from just under 60% on Tuesday, according to data from CME’s FedWatch Tool.
“It is clear that the Federal Reserve’s job is still unfinished and that markets are correct in repricing federal funds rate expectations going forward,” Raymond James’ chief economist Eugenio Alemán wrote in a note to clients following the report.
“Under this environment, it is only oil and gasoline prices that are keeping inflation contained. That is, any surge in oil and gas prices could severely compromise the Fed’s inflation target. The Fed should be particularly concerned about the services less energy component of CPI.”
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Stocks open higher after inflation data
US stocks moved to the upside in early trading on Wednesday as investors weighed fresh consumer inflation data that met economist forecasts as the central bank debates another rate cut next month.
The Dow Jones Industrial Average (^DJI) opened about 0.2% higher, coming off a steep slide as stocks closed lower across the board. Both the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) rose roughly 0.1%.
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Inflation holds steady in October
A closely watched report on US inflation showed consumer price increases remained consistent during the month of October, according to the latest data from the Bureau of Labor Statistics released Wednesday morning.
The Consumer Price Index (CPI) increased 2.6% over the prior year in October, a slight uptick from September’s 2.4% annual gain in prices. The yearly increase matched economist expectations.
The index rose 0.2% over the previous month, matching the increase seen in September and also on par with economists’ estimates.
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 September, and 3.3% over last year for the third consecutive month.
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Good morning. Here’s what’s happening today.
Here’s a look at today’s key economic and market themes: Wall Street awaits fresh consumer inflation data, while Spirit Airlines (SAVE) plummets 70% amid looming bankruptcy concerns. US mortgage rates continue their post-election climb following Donald Trump’s victory. Meanwhile, SoftBank Group (SFTBY) plans to build a supercomputer using Nvidia’s (NVDA) new Blackwell chips, underscoring its ambitions in AI.
Economic data: MBA Mortgage Applications, (week ending Nov. 8); Consumer Price Index, October; Real average hourly earnings, October
Earnings: Cisco (CSCO)
Here are some of the biggest stories you may have missed overnight and early this morning:
Kashkari: Inflation surprise could prompt Fed ‘pause’
Stocks have ‘room to run’ but that doesn’t mean buy: Bridgewater CIO
Inflation ‘unlikely to show much progress’ in October
Spotify forecasts profit above estimates, stock jumps
US mortgage rates rose again in week after Trump’s victory
