US stocks opened mixed on Tuesday but still floated near record highs, as a key inflation report showed prices largely holding steady ahead of the Federal Reserve’s final 2023 policy meeting.
The Dow Jones Industrial Average (^DJI) edged up roughly 0.1%, or nearly 50 points, while the S&P 500 (^GSPC) dropped around 0.1%. Contracts on the tech-heavy Nasdaq Composite (^IXIC) traded flat after all three major gauges closed Monday at their highest levels since early 2022.
The Consumer Price Index (CPI) showed prices ticked up slightly at 0.1% over last month and 3.1% over the prior year in November, as Yahoo Finance’s Alexandra Canal reported.
Investors are widely expecting a pause to rate hikes at the end of the central bank’s two-day meeting, which starts Tuesday. But traders are easing back on their bets on a rate cut in March, according to CME FedWatch data.
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
While consumer inflation is expected to remain flat for the second straight month, the “core” reading — which excludes food and energy prices — could prove stickier. That would likely prompt investors to rethink when the Fed might start lowering rates.
Ahead of the report, US bond yields retreated, with 10-year Treasury yields (^TNX) down roughly 4 basis points to trade around 4.19%.
In individual stocks, Oracle (ORCL) shares sank over 10% in early trading after the software giant’s second quarter sales fell short of estimates.
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AStocks open mixed after CPI report
Stocks opened mixed after inflation cooled in November on an annual basis. Still, price increases ticked up on a monthly basis, adding to the debate over when the central bank will start to lower rates as inflation eases back toward its 2% target.
The Dow Jones Industrial Average (^DJI) ticked up about 0.1%, or nearly 50 points, while the S&P 500 (^GSPC) dropped around 0.1%. Contracts on the tech-heavy Nasdaq Composite (^IXIC) traded flat, after all three major gauges closed Monday at their highest levels since early 2022.
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MInflation data for November showed price pressures continue to moderate in the US economy, though not at the kind of rapid pace that would put considerable pressure on the Federal Reserve to cut interest rates in short order.
The Consumer Price Index (CPI) for November showed headline inflation rose 0.1% over the prior month and 3.1% over the same month last year. Economists had expected monthly inflation to be flat and annual inflation to hit 3.1%.
On a “core” basis, which strips out the cost of food and energy, prices rose 0.3% over last month and 4% over last year, both in line with estimates.
The main drivers of November’s inflation data were the cost of energy — which fell 2.3% in November — and shelter, which rose 0.4% in November, a pickup from October’s 0.3% increase. The cost of gasoline fell 6% in November.
On Monday, economists at Goldman Sachs pulled forward expectations for when the Fed would cut interest rates to the third quarter of next year on account of inflation falling faster than expected.
Tuesday’s report shows this process continues to occur at an uneven pace.
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