Stocks fell for a second consecutive day as investors awaited the November CPI report. Frederic J. Brown/AFP via Getty Images
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Investors exhibited caution on Tuesday, leading to a second consecutive day of decline for major US stock indexes, as they anxiously awaited the release of the November Consumer Price Index (CPI) report. This crucial inflation data, scheduled for Wednesday morning, is expected to significantly influence the Federal Reserve’s interest rate decision next week.
CPI Report Looms Large Over Fed Decision
The Dow Jones Industrial Average fell over 150 points, while the S&P 500 and Nasdaq Composite also experienced declines. Monday’s market dip was attributed to a Chinese probe into Nvidia. However, Tuesday’s subdued trading reflected the market’s anticipation of the CPI report. Economists project a 2.7% year-over-year price increase for November, slightly exceeding October’s 2.6% rise.
A higher-than-expected CPI reading could potentially trigger market volatility, particularly as options traders anticipate the smallest CPI-related market movement in three years, according to Bank of America. The report will play a pivotal role in shaping the Fed’s monetary policy decision at its upcoming December 17-18 meeting. Current market expectations indicate an 86% probability of a quarter-point rate cut by the central bank. However, any unexpected inflation data could disrupt these predictions.
Google’s Quantum Breakthrough Propels Alphabet Stock
Amidst the market uncertainty, Alphabet, Google’s parent company, stood out as a notable winner on Tuesday. Its stock surged by as much as 6% following the announcement of a significant breakthrough in quantum computing.
Google’s quantum computing breakthrough sent its stock soaring. Rafael Henrique/SOPA Images/LightRocket via Getty Images
Other Notable Market Movers
In contrast to Alphabet’s gains, Oracle experienced a nearly 7% decline after releasing a disappointing second-quarter earnings report. UnitedHealth Group continued its downward trend, with shares plummeting 10% following the tragic death of CEO Brian Thompson last week.
Closing Bell Numbers
At the closing bell on Tuesday, the major US indexes registered the following performance:
- S&P 500: 6,034.91, down 0.30%
- Dow Jones Industrial Average: 44,247.83, down 0.35% (-154.10 points)
- Nasdaq Composite: 19,687.24, down 0.25%
Additional Market Developments
Other noteworthy market developments included:
- Bitcoin’s recent retreat from its surge above $100,000 raises concerns about a potential 13% correction.
- The Bank for International Settlements (BIS) cautioned that governments need to curtail spending to avert a potential market panic triggered by excessive global debt.
- The robust post-election market rally has prompted some analysts to raise concerns about potential market corrections in 2025.
- Zillow predicts that a surge in home sales by baby boomers, often referred to as a “silver tsunami,” will not significantly improve housing affordability.
- A research firm highlighted Japan as a potential source of market risk in the coming year.
Commodity, Bond, and Cryptocurrency Markets
- West Texas Intermediate crude oil remained relatively stable at $68.36 a barrel, while Brent crude, the international benchmark, dipped slightly to $71.99.
- Gold experienced a 1.2% increase, reaching $2,718 per ounce.
- The 10-year Treasury yield rose two basis points to 4.222%.
- Bitcoin declined by 0.3% to $96,343.14.
The market’s performance underscored the prevailing uncertainty surrounding inflation and its potential impact on future Fed policy. Investors will closely scrutinize the November CPI report for clues about the direction of interest rates and the broader economic outlook.
