Inflation Data Boots Wall Street as Stocks Hover Near Records
Wall Street moved slightly on Wednesday after fresh inflation data aligned with expectations, leaving investors anticipating further economic support through another interest rate cut next month.
The S&P 500 remained nearly unchanged, while the Dow Jones inched up by 66 points, or 0.1 percent, and the Nasdaq slipped by 0.2 percent in morning trading. Elsewhere, Bitcoin surged past $90,000, reflecting a broader rally in cryptocurrencies.
The market response was bolstered by a drop in Treasury yields; the 10-year yield fell to 4.39 percent after the inflation report indicated that last month’s consumer inflation rose to 2.6 percent from 2.4 percent, as predicted, while “core inflation” held steady.
A sign marking the intersection of Broadway and Wall Street is shown in New York’s Financial District on Oct. 30, 2024. On Wednesday, the latest inflation update boosted hopes that more help for the economy will arrive next month from another cut to interest rates.
Peter Morgan/AP Photo
Analysts noted that core inflation’s stability could influence the Federal Reserve‘s rate decisions. “Bang in-line core inflation leaves the Fed on track to cut rates in December,” said Lindsay Rosner, Goldman Sachs Asset Management’s head of multi-sector fixed income investing.
The Fed has already cut rates twice since September to support the economy, with a 79 percent likelihood of a third cut next month, according to CME Group’s data.
Trump’s Economic Policies Could Shift Forecasts
While the current economic outlook suggests a continued decrease in interest rates, President-elect Donald Trump‘s policies may change that trajectory.
Economists warn that Trump’s tax cuts, proposed tariffs, and deregulation could increase government debt, potentially raising inflation and driving faster economic growth.
Previous Fed forecasts had anticipated rate cuts into 2025, but this might shift as Trump assumes office, reshaping fiscal priorities.
“The market may be concerned that we are at an inflection point, with inflation potentially returning to an upward trajectory,” noted Scott Wren, senior strategist at Wells Fargo Investment Institute. Following stronger-than-expected economic data, markets remain vigilant for signs of inflationary pressures.
President-elect Donald Trump smiles at an election night watch party at the Palm Beach Convention Center, Wednesday, Nov. 6, 2024, in West Palm Beach, Fla. Prior forecasts published by the Fed implied it could keep cutting rates through next year. But Trump’s victory in the election may have scrambled those plans.
Evan Vucci/AP Photo
Rivian Automotive Surges on Joint Venture News
In company news, Rivian Automotive shares jumped 15.5 percent after the electric vehicle maker announced further details about a partnership with Volkswagen Group.
The venture, initially estimated at $5 billion, may now exceed $5.8 billion, including a $1.3 billion cash payment from Volkswagen for intellectual property licensing. Volkswagen will also hold a 50 percent stake in the joint project, indicating significant collaboration in electric vehicle technology.
Spirit Airlines Stock Plunges
Meanwhile, Spirit Airlines‘ stock plummeted 56.5 percent following disclosures about its debt restructuring efforts.
In a filing, the airline shared that renegotiating repayment terms could impact shareholder value, even as it works to protect employees and customers.
The airline’s announcement sent ripples through the sector, with Southwest and United Airlines stocks climbing in response.
This article includes reporting from The Associated Press