Wall St set for higher open as inflation data keeps Fed rate-cut hopes intact

By Purvi Agarwal and Lisa Pauline Mattackal

(Reuters) -U.S. stocks were on track to open higher on Wednesday after in-line consumer price inflation data kept the Federal Reserve on track to cut interest rates in December.

The consumer price index rose 0.2% for the fourth straight month, the Labor Department's Bureau of Labor Statistics said, and advanced 2.6% on an annual basis. Excluding the volatile food and energy components, the CPI increased 0.3% in October.

The numbers were in line with economists' forecasts, with futures reversing early losses following the data.

"The market is already a little bit on edge about the inflationary possibilities for 2025 under a new administration," said Ross Mayfield, investment strategist, Baird.

"The fact that (CPI) came in line ... gives markets a chance to breathe and focus on the other things that have been moving it lately."

Expectations for a 25-basis point interest rate cut at the Fed's December meeting jumped to 72% after the data, from around 58%, according to CME FedWatch.

Dow E-minis were up 51 points, or 0.12%, S&P 500 E-minis were up 10.5 points, or 0.17%, and Nasdaq 100 E-minis were up 25 points, or 0.12%.

Futures tracking rate-sensitive small-cap companies also reversed course to jump 0.9% following the release of the CPI data.

All three major indexes closed lower on Tuesday, also pressured by rising U.S. Treasury yields on expectations that President-elect Donald Trump's policies could exacerbate inflation. The benchmark 10-year Treasury yield eased back to below 4.4% after Wednesday's CPI data.

EV maker Tesla (NASDAQ:TSLA ) gained 2.9% after Trump named CEO Elon Musk as a co-leader of a newly created Department of Government Efficiency.

Despite the declines on Tuesday, Wall Street has been largely upbeat over the past few days, expecting Trump's pro-business stance and possible tax cuts to buoy corporate growth, even as some worries remain over higher tariffs and inflation.

The S&P 500 has gained about 3.5% since the close on Nov. 5, and is on track for year-to-date gains of more than 25%.

A Bank of America's monthly fund manager survey showed global investors see higher growth than they did before, as well as an increase in inflation, in the wake of the U.S. election results.

Spirit Airlines (NYSE:SAVE )' shares plunged 59% after a report the U.S. carrier is preparing to file for bankruptcy protection, while the company said it is in talks with creditors.

EV maker Rivian (NASDAQ:RIVN ) soared 10% after Volkswagen (ETR:VOWG_p ) on Tuesday raised its investment in the company by 16% to $5.8 billion.

Amgen (NASDAQ:AMGN ) gained 3% after the company said there was no link between its experimental weight-loss drug and changes in bone mineral density, following data from an early-stage study that weighed on the stock in the prior session.



Caterpillar (NYSE:CAT ) slipped 1.1% after brokerage Evercore ISI downgraded the heavy equipment maker's shares.

Fed officials Alberto Musalem and Jeffrey Schmid are scheduled to speak later in the day.

Source: Investing.com