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US markets cooled off from the highs off the day to end at the flat line on Wednesday, as the post-election rally showed signs of exhaustion, extending from Tuesday's fall.
The Dow Jones gained 50 points but not before correcting nearly 200 points from the day's high. The S&P 500 was absolutely flat, while the Nasdaq fell 0.3% after a 100-plus point drop from the session's highs.
However, the case for a rate cut from the US Federal Reserve increased after the October inflation print came in-line with expectations of 2.6%. Core CPI also grew 3.3%, which is what economists had predicted.
Post the inflation announcement, the probability of a 25 basis points rate cut from the US Federal Reserve increased to 81% from 60% on Tuesday, according to the CME FedWatch tool.
“A hotter-than-expected inflation number could have convinced the Fed to stand pat at its next meeting,” said Seema Shah at Principal Asset Management. “A December cut is still in the cards.”
Ellen Zentner at Morgan Stanley Wealth Management noted markets are already weighing the possibility that the Fed will cut fewer times in 2025 than previously thought, and that they may hit the pause button as early as January.
Treasury 10-year yields advanced two basis points to 4.45%. The Bloomberg Dollar Spot Index climbed 0.4%. The US Dollar remained at a two-year high, while Bitcoin topped $93,000 before cooling off.
“After the massive rally we’ve seen in stocks, investors are looking for any sort of excuse that can usher in a pullback,” said Bret Kenwell at eToro. “Markets resolved higher following the election, instilling a ‘buy the dip’ mentality. If the market were to sell off in the short term, the pullbacks are likely to be shallow as fund managers buy the dip and look to chase performance into year-end.”
“It’s time to stop worrying about the Fed and inflation,” said David Russell at TradeStation. “Stocks have been on autopilot since the election and today’s numbers do nothing to hurt the trend. December is still in play for a cut.”
In fact, the options market is more concerned about a potentially big move in the S&P 500 next week following Nvidia Corp.’s earnings report than it was about Wednesday’s figures on consumer prices, Citigroup Inc. analysts say.
Over the next month, Nvidia is now priced as the largest event for the stock market. Such near-term concerns about macro data often take a back seat when it comes to technology, where the focus is on the next big artificial-intelligence breakthrough.
(With Inputs From Agencies.)
The Dow Jones gained 50 points but not before correcting nearly 200 points from the day's high. The S&P 500 was absolutely flat, while the Nasdaq fell 0.3% after a 100-plus point drop from the session's highs.
However, the case for a rate cut from the US Federal Reserve increased after the October inflation print came in-line with expectations of 2.6%. Core CPI also grew 3.3%, which is what economists had predicted.
Post the inflation announcement, the probability of a 25 basis points rate cut from the US Federal Reserve increased to 81% from 60% on Tuesday, according to the CME FedWatch tool.
“A hotter-than-expected inflation number could have convinced the Fed to stand pat at its next meeting,” said Seema Shah at Principal Asset Management. “A December cut is still in the cards.”
Ellen Zentner at Morgan Stanley Wealth Management noted markets are already weighing the possibility that the Fed will cut fewer times in 2025 than previously thought, and that they may hit the pause button as early as January.
Treasury 10-year yields advanced two basis points to 4.45%. The Bloomberg Dollar Spot Index climbed 0.4%. The US Dollar remained at a two-year high, while Bitcoin topped $93,000 before cooling off.
“After the massive rally we’ve seen in stocks, investors are looking for any sort of excuse that can usher in a pullback,” said Bret Kenwell at eToro. “Markets resolved higher following the election, instilling a ‘buy the dip’ mentality. If the market were to sell off in the short term, the pullbacks are likely to be shallow as fund managers buy the dip and look to chase performance into year-end.”
“It’s time to stop worrying about the Fed and inflation,” said David Russell at TradeStation. “Stocks have been on autopilot since the election and today’s numbers do nothing to hurt the trend. December is still in play for a cut.”
In fact, the options market is more concerned about a potentially big move in the S&P 500 next week following Nvidia Corp.’s earnings report than it was about Wednesday’s figures on consumer prices, Citigroup Inc. analysts say.
Over the next month, Nvidia is now priced as the largest event for the stock market. Such near-term concerns about macro data often take a back seat when it comes to technology, where the focus is on the next big artificial-intelligence breakthrough.
(With Inputs From Agencies.)
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