Dow, S&P 500, Nasdaq trade mixed as inflation print keeps Fed rate cut on track

Yahoo Finance’s Brooke De Palma reports:

Food inflation remained steady in October, with select items driving prices higher.

The cost of groceries increased by 1.1% compared to last year Data from the Bureau of Labor StatisticsAnd 0.1% compared to September. The overall food category rose 2.1%, driven by the higher cost of dining out, which rose 3.8%. Growth in restaurant meal prices exceeds growth in grocery prices in 2024 as higher wages continue to contribute to costs.

Overall, the CPI rose 2.6% from a year earlier in October.

“During the pandemic, we’ve seen a tremendous amount of acceleration, and that’s basically right back to where it was before the pandemic,” BLS economist Steve Reed said of grocery prices.

Egg prices, historically volatile, have contributed to stubborn grocery inflation. This item saw a 30.4% increase year-over-year but a 6.4% decrease month-over-month, the largest since April.

Prices of oranges, including tangerines, also contributed to strengthening food prices in general. The fruit has been affected by drought and extremely high temperatures caused in part by the El Niño climate pattern Citrus greeningbacterial disease. Production in Brazil fell 9% year over year, according to the USDA.

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New inflation data released Wednesday showed consumer prices rising as expected in October, keeping the Federal Reserve on track to cut interest rates again in December.

“There is progress on inflation,” Claudia Saham, chief economist at New Century Advisors, told Yahoo Finance after the data was released. He added, “We are moving in the right direction, but it has been slow. This is another month that matches this slowness.”

The outlook remains uncertain as economists warn of a possible return of inflation after the election of Donald Trump as the country’s next president.

Trump and his proposed policies are seen as potentially more inflationary due to the president-elect’s campaign promises to impose high tariffs on imported goods, reduce corporate taxes, and impose restrictions on immigration.

Immediately after Wednesday’s release, markets Continue the price It cut interest rates by another 25 basis points in December after the central bank cut interest rates by that amount last week. Traders currently see a more than 80% chance that the Fed will cut interest rates by 0.25% next month, up from just under 60% on Tuesday, according to data from the Fed. CME’s FedWatch tool.

“It is clear that the Fed’s mission remains incomplete and markets are right to repricing expectations for future federal funds rates,” Raymond James chief economist Eugenio Aleman wrote in a note to clients after the report.

“In this environment, only oil and gasoline prices keep inflation contained. That is, any rise in oil and gas prices could severely harm the Fed’s inflation target. The Fed should be particularly concerned about services, Excluding the energy component of the CPI.

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U.S. stocks moved to the upside in early trading Wednesday as investors weighed new consumer inflation data that matched economists’ expectations while the central bank discusses another interest rate cut next month.

The Dow Jones Industrial Average (^DJI) opened roughly 0.2% higher, after a sharp decline as stocks closed lower across the board. The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) both rose about 0.1%.

Here’s a look at today’s key economic and market topics: Wall Street awaits new data on consumer inflation, while shares of Spirit Airlines (SAVE) fall 70% amid looming bankruptcy fears. US mortgage rates continue to rise post-election following Donald Trump’s victory. Meanwhile, SoftBank Group (SFTBY) plans to build a supercomputer using new Blackwell chips from Nvidia (NVDA), underscoring its AI ambitions.

Economic data: MBA Mortgage Applications (week ending November 8); Consumer Price Index, October; Real average hourly wages, October

Earnings: Cisco (Cisco)

Here are some of the biggest stories you may have missed overnight and early this morning:

Kashkari: Inflation surprise may prompt the Fed to “pause”

Stocks Have ‘Room to Run’ But That Doesn’t Mean a Buy: Bridgewater CIO

Inflation is “unlikely to show significant progress” in October

Spotify expects earnings above estimates, shares jump

US mortgage interest rates rose again in the week after Trump’s victory

Spirit drops 70% amid looming bankruptcy threat

SoftBank is the first to obtain Nvidia’s new chips for supercomputers