Buzz on Business for December 13, 2023

Inflation came in higher than expectations on Tuesday. As we have said many times, Wall Street is an expectations game, but stocks shrugged off the inflation news and rallied from open to close. The inflation numbers weren’t too bad and better than we might have expected just a year ago.

Stock Market Report

• The Dow Jones Industrials are closing in on a new, all-time high of 36,953. They closed Tuesday at 36,578, up 173 points—five-tenths of one percent.
• The S+P 500 likewise had a gain of almost five-tenths. It closed at 4,644, up 21 points.
• The Nasdaq Composite was up seven-tenths—101 points—and it closed at 14,533.
• The  XRT Retailers broke the trend. They were off almost a full one percent as money piled into the semiconductors and other techs. The retailers closed at 67.53, off sixty-six cents.

Bond Markets

Interest rates couldn’t make up their minds after the CPI announcement. They bounced around and finished mixed.

• The two-year Treasury now yields 4.735%, which is basically flat on the day.
• The twenty-year likewise finished about where it started. It now yields 4.487%

Oil and Gold

• Oil was off $2.65 and closed back below $70.00 at $68.68.
• Like bonds, gold bounced around a lot right when the inflation numbers were announced before deciding it didn’t matter anyway. A troy ounce will now set you back $1,993.20, off fifty cents.

Markets Show Surprising Strength

We were surprised by the strength the market showed yesterday, given the ever-so-slightly higher inflation data that came out an hour before the markets opened.

Indeed, the S+P futures, which traded all night, sold off hard after the announcement. At one point, they were down more than twenty points but soon regained their footing, marched steadily higher all day, and closed very near their highs, albeit on lower volume.

And the inflation numbers weren’t half bad. The month-over-month CPI was up one-tenth of a percent against expectations of 0.0% and 0.0% last month. If this holds, it would put annual inflation at less than 1.5% for the year, well within the Fed’s target. Core CPI came in as expected, with a three-tenths increase. Too high but headed in the right direction.

Fed Meeting on Tap

We’ll get the Federal Open Market Committee’s report on the subject of inflation and all things economic at 2:00 pm ET today.