US stocks tick higher as CPI grows in line with expectations

Stocks were higher on Tuesday as Wall Street parsed through another round of inflation data in search for clues on when the Federal Reserve could start easing monetary policy.

The S&P 500 added 0.46 per cent to close at 4,643.70, while the Dow Jones Industrial Average gained 173.01 points, or 0.48 per cent, to 36,577.94. The Nasdaq Composite advanced 0.70 per cent to 14,533.40.

All three major indexes touched new intraday 52-week highs on Tuesday, with the S&P 500 hitting its highest intraday level since March of 2022. The tech heavy Nasdaq and Dow touched their highest intraday levels since April and January of last year, respectively.

US consumer prices for the month were largely in line with expectations, with a 0.1 percent increase from the prior month and a 3.1 percent rise from the previous year, reaching 4 percent on a core basis after excluding energy and food.

The report suggests ongoing inflation pressures, particularly in supercore inflation, but it's uncertain whether it will significantly impact the Federal Reserve's policy decisions, reinforcing the expectation of elevated interest rates to control inflation.

The report comes as investors try to end a strong year on a high note. The Dow, S&P 500 and Nasdaq Composite are all riding three-day winning streaks and have six consecutive weeks of gains. The S&P 500 also closed at its highest level since March 2022, while the 30-stock Dow settled at its highest point since January 2022. During the six-week run, the S&P 500 has surged more than 12 per cent.

Traders will now turn their attention to the Fed’s policy announcement, slated for Wednesday. Wall Street largely expect the central bank to hold rates steady. However, they will comb through Chair Jerome Powell’s commentary for signals of when rate cuts could come.

Shares of tech giant Oracle were down more than 12 per cent after the company’s revenue for the fiscal second quarter missed Wall Street expectations. Stock in retailer Macy’s pulled back 8 per cent following a downgrade to sell from Citi on Tuesday.

Turning to commodities, U.S. crude oil prices fell by nearly 4 per cent on Tuesday due to concerns among traders that rising inflation might delay the Federal Reserve's interest rate adjustments. The West Texas Intermediate contract for January is down 3.80 per cent, while the Brent contract for February settled down by 3.67 per cent.

Overall, most sectors closed higher overnight. Tech was the best performer, whilst Real Estate, Utilities and Energy all closed lower.

Futures

The SPI futures are flat.

Currency

One Australian dollar at 8:25 AM was buying 65.60 US cents.

Commodities

Gold has added 0.07 per cent. Silver has risen 0.03 per cent. Copper has gained 0.38 per cent. Oil has dropped 3.55 per cent.

Figures around the globe

European markets closed lower. London’s FTSE fell 0.03 per cent, Frankfurt lost 0.02 per cent, and Paris closed 0.11 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei added 0.16 per cent, Hong Kong’s Hang Seng gained 1.07 per cent while China’s Shanghai Composite closed 0.40 per cent higher.

The Australian share market closed 0.50 per cent higher at 7,235.29.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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