Following the declines observed over the past two trading sessions, stocks have rebounded on Wednesday, with the technology-driven Nasdaq leading the recovery by reaching a new record intraday high.
At present, both the Nasdaq and the S&P 500 are near their peak levels of the day. The Nasdaq has risen by 257.40 points or 1.3%, reaching 19,944.64. The S&P 500 is up by 43.36 points or 0.7%, standing at 6,078.27.
Conversely, the more narrowly focused Dow Jones Industrial Average is showing a moderate increase, up by 12.75 points, or less than a tenth of a percent, at 44,260.58. Shares of UnitedHealth (UNH) have hindered further gains for this blue-chip index.
The positive momentum in the stock market is attributed to the release of consumer price inflation data that met economists' expectations. This data, closely monitored by market participants, aligns precisely with predictions.
The Labor Department reported that the consumer price index (CPI) rose by 0.3% in November, following a 0.2% increase over the prior four months. This increase was in line with forecasts.
On an annual basis, the growth rate of consumer prices edged up to 2.7% in November, compared to 2.6% in October, also meeting expectations.
Excluding volatile food and energy prices, core consumer prices also rose by 0.3% in November, consistent with the increases seen over the past three months and matching expectations.
The Labor Department further noted that core consumer prices in November exhibited a 3.3% year-on-year increase, unchanged from October and aligning with forecasts.
In light of these data aligning with predictions, there is growing confidence that the Federal Reserve will reduce interest rates by an additional quarter point next week.
According to the CME Group's FedWatch Tool, there is currently a 96.4% probability that the Fed will lower rates by 25 basis points at its December meeting.
Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, commented, "The increase in the inflation rate (2.7% vs. 2.6%) won't dampen the holiday spirit; the Fed is expected to cut rates by another 25 basis points next week, which should support market rallies into the year's end."
He added, "Earlier this year, headline CPI consistently exceeded 3%, but now it remains consistently below that mark. Despite some month-to-month fluctuations, we believe the Fed is likely to overlook these variations and continue its path of monetary easing."
Sector Highlights
Gold stocks have notably surged today, propelling the NYSE Arca Gold Bugs Index upward by 2.9% to its highest intraday level in a month. This rally coincides with a sharp increase in the price of gold, with February delivery futures rising $36.50 to $2,754.90 per ounce.
Retail stocks are demonstrating significant strength, as evidenced by the 1.7% gain in the Dow Jones U.S. Retail Index, which has achieved a new record intraday high.
Strong performances are also seen in software, airline, and semiconductor stocks, while computer hardware stocks continue to experience a decline following yesterday's sell-off.
International Markets
Overseas, Asian-Pacific stock markets displayed a mixed performance on Wednesday. Japan's Nikkei 225 Index closed marginally above the flatline, China’s Shanghai Composite Index increased by 0.3%, while Hong Kong's Hang Seng Index experienced a decline of 0.8%.
In Europe, major markets have all gained ground. The French CAC 40 Index is up by 0.3%, and both the U.K.'s FTSE 100 Index and the German DAX Index have risen by 0.2%.
In the bond market, treasuries have remained relatively unchanged throughout the session. Currently, the yield on the benchmark ten-year note, which moves inversely to its price, has edged up by 1.7 basis points to 4.238%.
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