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Major market averages rose sharply on the Tuesday after that Retail inflation rose less than expected Last month.
S&P 5000 Index (SP500) acquired 1.7%daw (DJI) snap 0.8%and the Nasdaq Heavy Technology Composite (COMP. IND) paid up by 2.5%.
Prices fell. 10-year Treasury yield (US10Y(down 15 basis points to 3.45% and 2 year yield)US2Y) fell by 20 basis points, to 4.19%.
November CPI rose 0.1% month over month, compared to expectations for a 0.3% rise. The core rate rose 0.2% against expectations of 0.3%. The annual title rate fell to 7.1%. Shelter/OER was still hot, up 0.7%, which may have caused the market to stall after the initial rally.
The market is still pricing in a 50bps Fed hike tomorrow.
Pantheon Macroeconomics highlighted in an investor note: “This report does not change the Fed’s decision tomorrow; they will hike by 50 basis points. But Chairman Powell’s tone is likely less hawkish than it was in November, and his more pessimistic colleagues are likely to be encouraged by this.” We now believe that 25 basis points is likely to be on the 1st of February, and we think that will be the last rally.”
Furthermore, Dario Perkins of TS Lombard tweeted. “The Fed needs more than a few weak CPI numbers to confirm that the trend has changed.”
“We don’t get as many days as important as the next two, and today’s US CPI and tomorrow’s FOMC will likely be the difference between Santa’s big parade and a visit from Scrooge before Christmas,” Jim Reed of Deutsche Bank wrote. Keep in mind that the S&P 500’s best and worst day of the year so far has come on CPI day, and it was only last month that a downside surprise triggered a seismic reaction in the market, resulting in the biggest gains in a day. One S&P 500 (+5.54%) since April 2020, the largest daily decline in the two-year Treasury yield (-24.7 basis points) since 2008.”
Among the active stocks, Mirati Therapeutics (MRTX) rose sharply after Approval for the treatment of lung cancer.
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