Stocks moved mostly higher during trading on Wednesday, rebounding strongly following the pullback seen to start the week. The tech-heavy Nasdaq showed a particularly strong upward move, closing above 20,000 for the first time.
The Nasdaq surged 347.65 points or 1.8 percent to a new record closing high of 20,034.89, while the S&P 500 (SPI:SP500) climbed 49.28 points or 0.8 percent to 6,084.19.
Meanwhile, the narrower Dow showed a lack of direction over the course of the session before closing down 99.27 points or 0.2 percent at 44,148.56. The blue chip index closed lower for the fifth straight session amid a slump by shares of UnitedHealth (NYSE:UNH).
The strength in the broader markets came following the release of closely watched consumer price inflation data that came in line with economist estimates.
The Labor Department said its consumer price index climbed by 0.3 percent in November after rising by 0.2 percent for four straight months. The increase matched expectations.
The annual rate of growth by consumer prices ticked up to 2.7 percent in November from 2.6 percent in October, which was also in line with estimates.
Excluding food and energy prices, core consumer prices still rose by 0.3 percent in November, matching the increases seen in each of the three previous months as well as expectations.
The Labor Department also said core consumer prices in November jumped by 3.3 percent compared to the same month a year ago, unchanged from October and in line with estimates.
With the data matching expectations, the report has increased confidence the Federal Reserve will lower interest rates by another quarter point next week.
CME Group’s FedWatch Tool is currently indicating a 98.6 percent chance the Fed will cut rates by 25 basis points at its December meeting.
“The increase in the inflation rate (2.7% vs 2.6%) won’t be enough to spoil Christmas – the Fed is going to cut rates another 25 bps next week and that should enable markets to rally into year end,” said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.
He added, “The headline CPI was consistently above 3% in the beginning of the year and now it is consistently below 3%, so despite the fact that the series is a little noisy from month-to-month, we believe the Fed is likely to look through these fluctuations and continue on their easing path.”
Sector News
Gold stocks saw substantial strength on the day amid a sharp increase by the price of the precious metal, driving the NYSE Arca Gold Bugs Index up by 3.9 percent to its best closing level in over a month.
Significant strength also emerged among airline stocks, with the NYSE Arca Airline Index soaring by 3.7 percent to a nearly one-month closing high.
Semiconductor, networking and software stocks also saw considerable strength, contributing to the surge by the tech-heavy Nasdaq.
Notable strength was also visible among oil service, retail and brokerage stocks, while healthcare stocks bucked the uptrend.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday. Japan’s Nikkei 225 Index closed just above the unchanged line and China’s Shanghai Composite Index rose by 0.3 percent, while Hong Kong’s Hang Seng Index slid by 0.8 percent.
Meanwhile, the major European markets have all moved to the upside on the day. While the French CAC 40 Index climbed by 0.4 percent, the German DAX Index and the U.K.’s FTSE 100 Index rose increased by 0.3 percent.
In the bond market, treasuries moved lower over the course of the session after showing a lack of direction in early trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.0 basis points to 4.271 percent.
Looking Ahead
A report on producer price inflation in the month of November may attract attention on Thursday along with a report on weekly jobless claims.
SOURCE: RTTNEWS