Stock futures rise ahead of inflationary pressures

US stocks faltered during midday trade, trimming gains from a blast early Tuesday sparked by fresh inflation data that showed prices rose less-than-expected last month.

The S&P 500 (^GSPC) gained 0.3%. The Dow Jones Industrial Average (^DJI) slipped 0.1% during midday trade, shedding a 2% gain from earlier in the session. The tech-heavy Nasdaq Composite (^IXIC) gained 0.2%.

The rise in shares comes after BLS data showed prices rose 0.1% mom and 7.1% yoy in November. Tuesday’s data was seen by investors as potentially encouraging for the Federal Reserve to ease its aggressive rate hikes early next year.

“Although this is the second straight month of weaker than expected inflation, we don’t think that will change anything at tomorrow’s Fed meeting. We still expect a 50 basis point hike, but what matters is the forecast,” wrote Gina Bolvin, president of Bolvin Wealth Management Group, in a statement following the inflation data.

Following the inflation data and amid the ensuing stock rally, the dollar plummeted and surged as much as 5% against most major currencies and bitcoin (BTC-USD), approaching $18,000.

Yields also fell, with the 10-year Treasury yield falling as much as 16 basis points to around 3.45% early Tuesday.

Stocks had rallied Monday ahead of the inflation report, with the S&P 500 up 1.43% to start the new week, with energy, utilities and technology outperforming.

The rally continued early Tuesday as consumer price data came in cooler-than-expected: Economists polled by Bloomberg had expected headline CPI to rise 7.3% yoy and 0.3% mom.

Meanwhile, core CPI, excluding volatile food and energy components, rose 6.0% year-on-year after October’s 6.1% annual increase. The data is the final piece in the puzzle ahead of the Fed’s final monetary policy meeting in 2022, when the central bank is expected to hike interest rates by another 0.50%.

“In fact, not many days get as important to us as the next two, and US CPI today and FOMC tomorrow will likely mean the difference between a big Santa Claus rally and a visit from Scrooge before Christmas,” Germans’ Jim Reid and colleagues Bank wrote in an early morning note on Tuesday.

In commodity markets, oil prices were higher, with WTI crude up over 3% to around $75.76 a barrel on China’s easing of COVID-related restrictions.

On the front line of company news, United Airlines (UAL) has placed an order for 100 of Boeing’s first-class 787 Dreamliners with options to purchase 100 more, according to a press release. United Airlines shares fell nearly 7% on the news.

Elsewhere in the crypto world, Sam Bankman-Fried, founder and former CEO of bankrupt crypto exchange FTX, was arrested Monday in the Bahamas after the US filed criminal charges.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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