New York Stock Market Pauses as US Wholesale Prices Rebound... Trump Rings Opening Bell

November PPI Up 0.4% MoM... Exceeds Expectations
Nasdaq Pauses After First 20,000 Breakthrough... Tech Stocks Decline
ECB Cuts Interest Rate by 0.25%P... Third Consecutive Reduction

The three major indices of the U.S. New York stock market showed a slight decline in early trading on the 12th (local time). Although the Nasdaq index surpassed the 20,000 mark for the first time ever due to the 'Big Tech rally' the previous day, the market took a breather after the inflation data released in the morning exceeded expectations. Donald Trump, the President-elect of the U.S., visited the New York Stock Exchange to ring the opening bell in celebration of being named Time magazine's 'Person of the Year.'

As of 11:35 a.m. in the New York stock market, the Dow Jones Industrial Average (Dow) focused on blue-chip stocks was down 0.05% from the previous trading day, standing at 44,127.8. The S&P 500 index, centered on large-cap stocks, was trading down 0.14% at 6,075.95, and the Nasdaq index, focused on technology stocks, was down 0.22% at 19,990.72.

The Nasdaq index closed at 20,034.89 the previous day, up 1.77%, marking the first time it surpassed the 20,000 level. This was driven by the ongoing rally fueled by the artificial intelligence (AI) boom this year, combined with the November Consumer Price Index (CPI) increase released the day before, which did not spike significantly, adding to expectations of a rate cut this month. The S&P 500 rose 0.82% the previous day, while the Dow fell 0.22%, showing mixed trends.

The November Producer Price Index (PPI) released this morning exceeded market expectations. According to the U.S. Department of Labor, last month's PPI rose 0.4% month-over-month and 3% year-over-year. This surpassed both October's figures (0.3%, 2.6%) and expert forecasts (0.2%, 2.6%). The PPI, a wholesale price index, influences the CPI with a time lag and can be considered a leading indicator of retail prices. The increase in the November PPI compared to one month and one year ago suggests that inflationary pressures are not easing easily.

The November CPI, released a day earlier, rose 0.3% month-over-month and 2.7% year-over-year. These figures were 0.1 percentage points higher than October's increases (2.6% and 0.2%, respectively) but were in line with market expectations. The core CPI, which excludes volatile energy and food prices to show the underlying inflation trend, rose 0.3% month-over-month and 3.3% year-over-year, matching both October's increase and market forecasts.

Keith Buchanan, Chief Portfolio Manager at Globalt Investments, said, "The trajectory of disinflation (slowing inflation rate) is promising yet concerning at the same time," adding, "While inflation continues to fall below 3%, progress toward the Federal Reserve's target of 2% is slow."

The market is currently almost certain that the Fed will cut the benchmark interest rate by 0.25 percentage points this month. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market reflects a 98.1% probability that the Fed will reduce rates by 0.25 percentage points at the Federal Open Market Committee (FOMC) meeting scheduled for the 17th-18th. The probability of holding rates steady is 1.9%. However, there is a high probability (75.5%) that after a 0.25 percentage point cut this month, rates will be held steady in January next year.

Last week, new U.S. unemployment claims exceeded market expectations. According to the U.S. Department of Labor, new unemployment claims for the week of December 1-7 rose by 17,000 from the revised previous week to 242,000, marking the highest level in two months. This also exceeded expert forecasts (221,000) by 21,000. However, weekly unemployment claims tend to show increased volatility around year-end holidays such as Thanksgiving.

On this day, President-elect Trump visited the New York Stock Exchange to celebrate being named Time's Person of the Year. Ringing the opening bell, he reaffirmed his economic policy pledges, including corporate tax cuts, increased oil production, and easing inflationary pressures, emphasizing that "the U.S. economy will become very strong."

In Europe, central banks cut interest rates for the third consecutive time amid recession concerns. The European Central Bank (ECB) lowered the deposit rate by 0.25 percentage points from 3.25% to 3.0%, and the main refinancing rate from 3.4% to 3.15%. The marginal lending rate was also reduced from 3.65% to 3.4%.

By individual stocks, technology shares that surged the previous day were weak. Nvidia was down 1.83%, and Alphabet, Google's parent company, was down 0.26%. Tesla, which hit an all-time high the day before, was down 0.11%. Software company Adobe plunged 12.61% after disappointing earnings forecasts for next year.

U.S. Treasury yields were mixed by maturity. The 10-year U.S. Treasury yield, a global bond benchmark, rose 2 basis points (1 bp = 0.01 percentage points) to 4.29% compared to the previous trading day, while the 2-year Treasury yield, sensitive to monetary policy, fell slightly by less than 1 bp to around 4.15%.