S&P 500: CPI Report Clears Path for Fed Cut as Tesla Leads the Charge

What’s Driving the Market Today?

Stocks gained momentum on Wednesday following a November inflation report that matched economists’ expectations. The report has reinforced speculation that the Federal Reserve may proceed with a rate cut during its December meeting, providing optimism for traders as year-end approaches.

Inflation Cool Enough to Keep Rate Cuts on Track

November’s CPI rose 0.3% from October, with a 2.7% annual increase, while core CPI climbed 3.3% year-over-year. Though inflation picked up slightly from the prior month, traders took comfort in its alignment with expectations. Fed funds futures now show an 87% likelihood of a rate cut next week, suggesting optimism that monetary easing will continue.

Retail Drama: Macy’s Stumbles, Stitch Fix Shines

Macy’s slumped 9% after lowering its fiscal-year earnings outlook, citing delivery expenses and sluggish performance. Meanwhile, Stitch Fix surged over 20%, thanks to a raised revenue forecast for both the quarter and the full year, buoyed by strong customer engagement and operational improvements.

Tech Titans Rally, but Not Everyone Wins

Nvidia and Tesla propelled the tech sector higher, showcasing resilience among bull market leaders. Rigetti Computing climbed 7% following Google’s announcement of a quantum computing breakthrough. However, C3.ai lost 5% after a downgrade from JPMorgan, which highlighted concerns over its valuation in an increasingly cautious market.

GM Shifts Gears While GE Vernova Stalls

General Motors rose over 1% after announcing it would abandon its costly robotaxi development, folding the Cruise unit into its broader tech team. In contrast, GE Vernova fell 2.4% as weak revenue projections for 2024 and 2025 overshadowed its dividend announcement and share buyback plans.

Biggest Movers: A Wild Day Across the Board

Patterson Companies surged 34% after confirming it would be acquired by Patient Square Capital for $31.35 per share. Dave & Buster’s plunged 14%, as disappointing Q3 earnings and the resignation of its CEO spooked investors.

Other sharp moves included Bausch + Lomb’s nearly 12% drop following a downgrade from Citigroup, which cited rising competitive pressures. On the flip side, Wolverine World Wide advanced 3% after Stifel upgraded the stock, pointing to significant growth potential in 2025.

Market Forecast: Where Could the Market Be Headed Next?

The market appears cautiously bullish heading into the final Federal Reserve meeting of the year. Inflation data has eased fears of aggressive tightening, but persistent price pressures may temper the pace of future rate cuts.

If the Fed delivers the anticipated rate cut, key indices could rally further as traders position for a favorable end-of-year environment. However, expect gains to remain selective, with corporate earnings and economic data driving sector-specific opportunities. Diversified strategies may be essential as the market navigates these closing weeks of 2024.

More Information in our Economic Calendar.