The U.S. stock market saw modest movement today as Wall Street digested the latest inflation data, which met economists’ expectations. Investors are now considering the Federal Reserve’s next steps, especially with hopes of another interest rate cut on the horizon. The stock market’s focus remains on how inflation trends will shape the economy, making it a crucial factor for financial forecasts into 2025.
Stock Market Today: Modest Gains in Key Indexes
In early trading, the S&P 500 edged up 0.1%, recovering from a slight dip in the previous session. The Dow Jones Industrial Average rose by 72 points, or 0.2%, while the Nasdaq composite climbed by 0.1%. Bond yields provided some support for stocks, with the 10-year Treasury yield decreasing from 4.43% to 4.38% after inflation data aligned with expectations. Economists believe that “core inflation,” which strips out volatile energy and food prices, can provide clearer insights into inflation trends.
Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, noted that this steady inflation figure keeps the Federal Reserve on track for a potential rate cut in December. Such cuts are seen as supportive for the economy, aiming to maintain employment levels while controlling inflation, which currently hovers near the Fed’s target of 2%.
Federal Reserve Rate Cuts and Economic Outlook
The Federal Reserve has already made two rate cuts this year, with a possible third expected in December. Rate reductions can stimulate economic growth, as they lower borrowing costs for businesses and consumers. According to data from CME Group, traders are currently placing a nearly 79% chance on a December rate cut.
Looking forward, the Fed’s 2025 plans remain uncertain, especially following the recent presidential election. Former President Donald Trump’s policies, which include tax reductions, increased tariffs, and less regulatory oversight, could lead to higher government debt levels and potential inflationary pressures. These factors may compel the Fed to carefully consider any rate adjustments next year.
Easing Inflation and Stock Market Reactions
For investors, today’s inflation report was reassuring, especially after recent economic indicators showed unexpected strength. Scott Wren, Senior Global Market Strategist at Wells Fargo Investment Institute, remarked, “While we anticipate inflation to rise slightly next year, today’s inflation data likely won’t have a significant impact on market sentiment.”
Inflation data has left many investors cautious, particularly around the potential for inflation to gain momentum. A rise in inflation can signal economic growth but also adds pressure on the Fed to maintain a careful balance.
Individual Stock Highlights: Amgen and Spirit Airlines
Among individual stocks, Amgen Inc. (NASDAQ:AMGN) rose by 1.9% following promising results from a study on its obesity treatment, which showed no bone safety risks. The positive news boosted investor confidence, adding momentum to Amgen’s stock.
Conversely, Spirit Airlines (NYSE:SAVE) experienced a sharp decline of 56.4% after revealing difficulties in renegotiating its debt repayments. The airline indicated that if an agreement is not reached, it could lead to a complete loss for shareholders, though efforts aim to secure protections for employees and customers.
Global Markets and Cryptocurrency Movement
Outside the U.S., Japan’s Nikkei 225 declined by 1.7% after seeing an increase in wholesale inflation, its highest rate since last July. South Korea’s Kospi fell 2.6%, largely due to Samsung Electronics (KRX:005930) stock reaching its lowest point in four years. This downturn contributed to a general decline in Asian and European markets.
The cryptocurrency market also saw notable action, with Bitcoin crossing the $90,000 mark. This surge came after former President Trump announced plans to support the cryptocurrency sector, positioning the U.S. as a leader in the crypto space. Dogecoin, frequently associated with Tesla CEO Elon Musk, jumped 15% as Musk was announced to head a newly formed “Department of Government Efficiency” under Trump’s administration.
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