U.S. November Inflation Data Meets Expectations

In a somewhat tumultuous atmosphere surrounding the U.Sstock market, Wednesday, December 11, saw the closing bell ring amidst a mix of gains and losses across the three major indicesThe S&P 500 managed to gain a notable 0.82%, closing at 6084.19 pointsMeanwhile, the Dow Jones Industrial Average dipped by 0.22% to end at 44148.56 points, while the Nasdaq Composite surged ahead with an impressive increase of 1.77%, crossing the 20000-point threshold for the first time in historyThis surge was fueled primarily by tech giants, with notable performances from companies such as Tesla, Google, Amazon, Meta, and Netflix, all achieving record highsSpecifically, Tesla and Google both saw their stocks rise by nearly 6%, marking a historic close, while Amazon, Meta, and Netflix experienced gains exceeding 2% each.

On the ETF front, the Nasdaq 100 ETF displayed robust activity early in the trading session

Reports indicated that the ETF opened high and continued to oscillate throughout the morningBy the time of reporting, it had risen by 1.61%, boasting a transaction volume nearing 46 million yuan and a turnover rate of 1.95%. Additionally, the premium rates associated with the ETF have been observed to exceed 1%, indicating a strong investor interest.

As for capital flows into this ETF, data from the Wind financial terminal revealed that there has been a significant net inflow of approximately 27 million yuan over the last 10 trading days, translating to a net flow rate of 13.83%. This trend underscores the growing confidence investors place in the technological sector and the broader implications of the economic landscape.

On the macroeconomic front, a much-anticipated release by the U.SBureau of Labor Statistics occurred on December 11, revealing crucial details about inflation metrics

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According to the data for November, the Consumer Price Index (CPI) experienced a month-over-month increase of 0.3%. When seasonally adjusted, this represented a year-over-year growth of 2.7%. Excluding volatile food and energy prices, the core CPI similarly reported a month-over-month rise of 0.3%, with an unadjusted year-over-year growth rate reaching 3.3%.

Interestingly, this inflation report resonated well with market expectationsDespite some upward pressure on core goods prices stemming from hurricane impacts that caused a minor resurgence, it was noteworthy that rent inflation showed signs of cooling, dropping to its lowest levels since 2021. This decline significantly alleviated fears regarding prolonged inflationary pressuresCollectively, these inflation figures appear to create a favorable environment for the Federal Reserve, paving the way for interest rate cuts in the upcoming week.

However, predictions indicate that a potentially "hawkish" rate-cut scenario could unfold next week

Early forecasts suggest that the updated dot plot could reflect only two anticipated rate cuts through 2025, a significant decrease from previously projected forecasts of fourAdditionally, there is speculation that the federal funds rate may gradually adjust to a neutral range of between 3.75% and 4% by the end of the second quarter of next year.

The inflation data from November is particularly indicative of a broader trend in core service inflation, suggesting a slight cooling that eases market anxieties over possible rebounds in pricesGiven this context, the Federal Reserve is likely to be inclined toward a 25 basis point rate cut in DecemberStill, the uncertainty surrounding the long-term path of rate cuts in 2025 cannot be neglectedObservations of the broader U.Seconomic momentum hint at recovery as manufacturing indicators have shown a consistent rise since September, supported by improved sentiment among small business owners and a notable uptick in the NFIB Small Business Confidence Index

Furthermore, the latest GDPNow data from the Atlanta Fed estimates that the annualized GDP growth for the fourth quarter could reach a robust 3.3%.

Concurrently, data points such as a slight uptick in the unemployment rate in November and sustained moderate inflation levels provide a dual context for the Fed’s decision-making processWhile recent data suggests a steady economic pulse, the current labor market dynamics indicate that inflation pressure is not a primary concern for the FedTherefore, the anticipated 25 basis point cut in December seems to face minimal opposition given that the inflation data largely aligns with expectations.

In conclusion, the intricate interplay between stock market performance and macroeconomic indicators sets a compelling stage for the Federal Reserve’s impending decisions on interest rate adjustmentsThis fascinating dance of indicators highlights a moment in economic history where investors, policymakers, and market analysts alike are all keenly tuned in to the unfolding narrative of American economic resilience amidst continued uncertainties