US equity indexes experienced gains, with the Nasdaq Composite reaching a new intraday record high following November's inflation report, which indicated potential weaknesses in certain persistent areas. The S&P 500 saw an increase of 0.9%, climbing to 6,088.8, while the Nasdaq Composite surged by 1.7% to 20,030.2.
The Dow Jones Industrial Average, however, edged up by less than 0.1%, reaching 44,275.3 around midday on Monday. Notably, the Nasdaq hit an all-time peak of 20,031.33 earlier in the trading session, propelled by significant gains in the communication services, consumer discretionary, and technology sectors.
Conversely, healthcare stocks led the decliners. In November, the consumer price index rose by 0.3%, a slight increase from 0.2% in the previous four months, as reported by the Bureau of Labor Statistics on Wednesday. On an annual basis, inflation accelerated to 2.7%, compared to October's 2.6% rate, with both metrics aligning with forecasts from a Bloomberg-compiled survey. Core inflation, excluding volatile food and energy prices, remained steady at 0.3% for the month, with an annual increase of 3.3%.
These results matched consensus estimates, indicating stability in core prices. Most of the inflationary pressures were concentrated in discretionary items, such as motor vehicles, lodging, and airfares, according to Oxford Economics. The firm noted a softening trend in several sticky inflation components, including shelter, highlighting that the 'disinflationary trend has room to run.' By Wednesday afternoon, the likelihood of a quarter-point reduction during the upcoming monetary policy committee meeting rose to approximately 95%, up from 89% the day prior, as indicated by the CME Group's FedWatch tool.
The highest probability forecast for interest rates a year from now stands between 3.75% and 4%, compared to the current range of 4.5% to 4.75%, which remained unchanged. US Treasury yields displayed a mixed performance during intraday trading, with the US 10-year yield rising by 2.5 basis points to 4.25%, while the two-year yield dipped by one basis point to 4.14%. Additionally, West Texas Intermediate crude oil futures experienced a notable increase of 2%, reaching $69.93 a barrel..