• The Dow and S&P 500 rose slightly, while Nasdaq fell, following October data showing consumer prices rising as expected, fueling hopes for a December rate cut by the U.S. Federal Reserve.
• The consumer discretionary sector index rose over 1%, likely due to rate cut bets, while Spirit Airlines' shares plunged 59% amid bankruptcy rumors, and Rivian's shares soared 13.7% after Volkswagen increased its investment.
• Investors are anticipating a pro-business stance and possible tax cuts from the incoming administration, but are also contending with rates, inflation, and valuations that are bigger headwinds now than in 2016.
• In the global market, Indian benchmark indices Sensex and Nifty 50 are expected to open muted, while Asian shares drifted higher after U.S. inflation data supported the case for another Federal Reserve rate cut next month.

The Dow and the S&P 500 ended slightly higher on November 13, 2024, while the Nasdaq lost ground. This came after October data showed consumer prices rising in line with expectations, bolstering hopes that the U.S. Federal Reserve will cut interest rates in December.

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

Following the report, traders' bets reflected a more than 82% probability for a 25 basis-point interest rate cut at the Fed's December meeting, up from 58.7% on Monday. This was reflected in the CME group's FedWatch tool. Despite some Fed officials sounding more cautious, Minneapolis Fed President Neel Kashkari expressed confidence that inflation was headed down, noting that the CPI data confirms that downward path.

Angelo Kourkafas, senior investment strategist at Edward Jones, expressed relief that inflation didn't come in ahead of expectations. He noted that the right-in-line number helped alleviate some of those fears, and nothing from the day's data argued against a December rate cut.

Market Performance and Individual Shares

The consumer discretionary sector index, up more than 1% on the day, likely benefited from bets on rate cuts. However, Dallas Federal Reserve President Lorie Logan cautioned that the U.S. central bank should proceed cautiously on further interest rate cuts to avoid inadvertently re-igniting inflation. The Dow Jones Industrial Average rose 47.21 points, or 0.11%, to 43,958.19, the S&P 500 gained 1.39 points, or 0.02%, to 5,985.38 and the Nasdaq Composite lost 50.66 points, or 0.26%, to 19,230.74.

In individual shares, Spirit Airlines' shares plunged 59% after a report that the U.S. carrier was preparing to file for bankruptcy protection. In contrast, shares of Rivian soared 13.7% after Volkswagen increased its investment in the EV maker.

The U.S. Treasury 2-year yields fell sharply after the inflation report. However, the benchmark 10-year yield regained ground after the data and rose as high as 4.46% as investors focused on longer-term expectations that President-elect Donald Trump's policies could exacerbate inflation.

Global Market and Future Expectations

Investors are expecting a pro-business stance and possible tax cuts from the next administration. The projections that the Republican Party had won a majority in the House of Representatives suggested that it could be easier for Trump to push through his policies. Sahak Manuelian, managing director and head of equity trading at Wedbush Securities, noted this. However, Venu Krishna, head of U.S. equity strategy and global equity-linked strategies at Barclays, warned that the market is contending with rates, inflation, and valuations that are bigger headwinds now than they were in 2016, the last time Trump became president."

In the global market, Indian benchmark indices Sensex and Nifty 50 are likely to see a muted opening on November 14, tracking cues from GIFT Nifty trading around 23,629.5. The Sensex and Nifty closed deep in the red on November 13, marking their fifth consecutive day of losses as inflation concerns and a sell-off in metal stocks weighed on market sentiment.

The Nifty has now dropped nearly 10 percent from its all-time high of around 20,200 reached on September 27. Asian shares drifted higher Thursday after U.S. inflation data supported the case for another Federal Reserve rate cut next month.