[New York Stock Market] Digesting Expected CPI, 'Breather'... Expanded Outlook for December Small Cut

October CPI Up 2.6% Year-on-Year
Small Cut Outlook for Next Month Rises to 80% Range
October PPI to Be Released on the 14th Draws Attention

The three major indices of the U.S. New York Stock Exchange closed mixed within a narrow range on the 13th (local time). After a broad decline the previous day due to fatigue from the 'Trump rally,' the market showed no clear direction as investors took a breather. Last month's Consumer Price Index (CPI) rose in the mid-2% range, in line with market expectations, raising the possibility of a rate cut next month to over 80%.

On this day in the New York stock market, the blue-chip-focused Dow Jones Industrial Average closed at 43,958.19, up 47.21 points (0.11%) from the previous trading day. The large-cap-focused S&P 500 index rose 1.39 points (0.02%) to 5,985.38, while the tech-heavy Nasdaq index fell 50.66 points (0.26%) to close at 19,230.74.

By individual stocks, Tesla, a representative 'Trump beneficiary stock,' rebounded 0.53% after a sharp drop the previous day. Donald Trump, the U.S. President-elect, officially nominated Elon Musk, Tesla's CEO who has strongly supported him during the election process, as head of the Office of Efficiency in Government the day before. With expectations of deregulation under the second Trump administration, bank stocks like JPMorgan Chase rose 0.67%. On the other hand, Trump Media & Technology (DJT) fell 5.05%.

Investors focused on the October CPI released that morning. According to the U.S. Department of Labor, last month's CPI rose 2.6% year-over-year. Although it increased by 0.2 percentage points from 2.4% in September, it met market expectations. The core CPI, which excludes volatile energy and food prices and shows the underlying inflation trend, rose 3.3% year-over-year, also in line with forecasts. Rising housing and food prices contributed to last month's CPI increase, but since it met expectations, hopes for a rate cut in December spread. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds futures market reflected an 82.4% chance that the Fed would cut rates by 0.25 percentage points at the December Federal Open Market Committee (FOMC) regular meeting, a significant rise from 58.7% the day before.

David Russell, Global Market Strategist at TradeStation, said, "It's time to stop worrying about the Fed and inflation," adding, "Stocks have been on autopilot after the election (rising too much), and the (CPI) figures released today do not negatively affect the trend. The possibility of a December cut remains high."

Some speculate that the Fed may pause monetary easing for a while after implementing a rate cut next month. Skyler Weinand, Chief Investment Officer (CIO) at Reagan Capital, said, "Today's CPI release met market expectations but still significantly exceeds the Fed's 2% target," and forecasted, "The Fed may pause the monetary easing path after making a single rate cut in December."

U.S. Treasury yields were mixed by maturity. The 10-year U.S. Treasury yield, a global bond rate benchmark, rose 2 basis points (1bp=0.01%) to 4.45%, while the 2-year Treasury yield, sensitive to monetary policy, fell 6 basis points to 4.28%.

Investors are awaiting another inflation indicator, the October Producer Price Index (PPI), to be released the next day. The wholesale price index, PPI, affects the retail price index, CPI, with a time lag. Last month's PPI is expected to have risen 0.2% month-over-month, an increase from September's 0%.

International oil prices closed higher. West Texas Intermediate (WTI) crude rose $0.31 (0.46%) to $68.43 per barrel, while Brent crude, the global oil price benchmark, increased $0.39 (0.54%) to $72.28 per barrel.