On Wednesday, the stock market experienced a notable rebound after an initial dip earlier in the week, with the Nasdaq leading the gains by closing above the 20,000 mark for the first time. The tech-centric Nasdaq index climbed 1.8%, adding 347.65 points to finalize at a new record high of 20,034.89. Meanwhile, the S&P 500 followed suit, rising 0.8%, or 49.28 points, to close at 6,084.19.
Conversely, the Dow Jones Industrial Average exhibited indecision throughout the session, ultimately declining by 99.27 points, or 0.2%, to close at 44,148.56. This marked a fifth consecutive decline for the blue-chip index, influenced significantly by a downturn in UnitedHealth (UNH) shares.
Market-wide strength was largely attributed to the release of core consumer price inflation data that met analyst predictions. According to the Labor Department, the Consumer Price Index (CPI) increased by 0.3% in November, following a consistent 0.2% rise over the last four months, aligning with forecasts.
Annually, consumer prices rose by 2.7% in November compared to 2.6% in October, in line with market expectations. When excluding volatile food and energy costs, core consumer prices also rose by 0.3% in November, consistent with the previous three months and market projections.
Additionally, core consumer prices recorded a 3.3% increase year-on-year in November, unchanged from October and as anticipated by analysts.
With inflation data meeting expectations, confidence has grown that the Federal Reserve is poised to reduce interest rates by an additional quarter percentage point in its upcoming meeting. The CME Group's FedWatch Tool indicates a 98.6% probability of a 25 basis point rate cut in December.
Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, commented, "The minor uptick in the inflation rate won't hinder the holiday cheer—the Fed is expected to ease rates again by 25 basis points next week, potentially boosting the markets into the end of the year." He further noted, "Despite some volatility, the year-on-year CPI trends have moderated from above 3% earlier this year to below 3%, suggesting that the Fed will likely continue its easing strategy, disregarding short-term fluctuations."
Sector Specific Insights:
Gold stocks showed significant gains, fueled by a sharp rally in gold prices, pushing the NYSE Arca Gold Bugs Index up by 3.9%—its strongest close in over a month. Similarly, airline stocks were bolstered, with the NYSE Arca Airline Index rising 3.7% to a near one-month closing high. The surge in the tech-heavy Nasdaq was supported by strong performances from semiconductor, networking, and software sectors.
Additional strength was noted in oil services, retail, and brokerage sectors, though healthcare stocks diverged from the day's positive market trend.
International Markets:
In Asian markets, trading results were mixed on Wednesday. Japan's Nikkei 225 Index hovered slightly above flat, China’s Shanghai Composite Index edged up by 0.3%, while Hong Kong's Hang Seng Index retreated by 0.8%.
In Europe, major markets reported gains, with France's CAC 40 Index rising by 0.4%, and both Germany's DAX Index and the U.K.'s FTSE 100 Index climbing by 0.3%.
In the bond market, treasuries softened as the day progressed after initial indecisiveness. Consequently, the yield on the benchmark ten-year note—moving inversely to its price—rose by 5 basis points to 4.271%.
Looking Ahead:
On Thursday, the spotlight may shift to reports on November's producer price inflation and weekly jobless claims, which are anticipated to provide further insights into the economic landscape.
The material has been provided by InstaForex Company -
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