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- US stocks ended Tuesday’s session with a win but came off session highs.
- Stocks initially surged after November CPI cooled to 7.1%, the lowest rate in nearly a year.
- The Fed is likely to deliver its 7th rate increase at its final meeting of 2022 on Wednesday.
US stocks finished higher Tuesday after data showed consumer prices cooled in November but investors surrendered stronger gains as they braced for the Federal Reserve’s final policy meeting of 2022 that will cap off this year’s aggressive rate-hike campaign.
The S&P 500 ended up modestly, notching a second straight win after soaring by more than 2% during the session. The Nasdaq Composite rose but back off a potential advance of more than 3%. Ten of the S&P 500’s 11 sectors rose, with the consumer staples group lagging behind.
Here’s where US indexes stood at the 4:00 p.m. closing bell on Tuesday:
- S&P 500: 4,019.95, up 0.74%
- Dow Jones Industrial Average: 34,110.69, up 0.31% (105.65 points)
- Nasdaq Composite: 11,256.81, up 1.01%
Stocks climbed after the Labor Department said the headline Consumer Price Index rose to 7.1% year over year, the lowest reading since December 2021. Core CPI rose 6% year-over-year, below the projection of 6.1% from economists polled by Bloomberg.
With that report in hand, investors prepared to hear from the Federal Open Market Committee on Wednesday. It’s expected to deliver its seventh and final rate increase of 2022, sized at 50 basis points. Odds that the Fed will continue to downsize rate hikes to 25 basis points in 2023 spiked up after the November inflation report.
However, “we think it’s too early for the Fed to send a clear signal about an end to its tightening cycle,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a Tuesday note.
“The US’s two-track economy will make it difficult for the Fed to clearly signal an end to the tightening cycle, and there is even scope for disappointment as the US economy is starting to hurt from this year’s tightening and geopolitical risk adds to uncertainty.”
The Fed on Wednesday will update its economic and inflation projections.
Outside of equity indexes, investors learned former FTX CEO Sam Bankman-Fried is facing various criminal and civil charges from the Securities and Exchange Commission, the Southern District of New York, and the Commodity Futures Trading Commission.
Bankman-Fried, who was arrested at his home in the Bahamas on Monday, was charged by the SEC with defrauding $1.8 billion out of investors. He faces conspiracy and wire fraud charges, among others, from the Southern District of New York.
Here’s what else is happening today:
- Binance temporarily paused withdrawals of stablecoin USDC after customers pulled over $2 billion in funds over worries about the crypto exchange’s stability.
- BlackRock, the world’s largest asset manager, expects the Fed to keep interest rates high even if a recession crushes stocks next year.
- Wharton professor Jeremy Siegel says the Fed will start rate cuts by mid-2023 and stocks are undervalued.
- Moderna stock jumped more than 20% during Tuesday’s session following upbeat results from a trial of its Keytruda cancer treatment.
In commodities, bonds, and crypto:
- West Texas Intermediate crude advanced 3.3% to $75.60 per barrel. Brent crude, the international benchmark, rose 3.6% to $80.80.
- Gold rose 2.1% to $1,830.20 per ounce.
- The 10-year Treasury yield fell 6 basis points to 3.49%.
- Bitcoin gained 3.8% to $17,763.