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Dow, S&P 500 barely up as inflation data keeps Fed rate-cut hopes undamaged

The Dow and the S&P 500 increased somewhat on Wednesday after October data showed consumer rates increasing in line with expectations, adding support to bets that the U.S. Federal Reserve will cut interest rates in December.

The consumer price index (CPI) rose 0.2% in October for the 4th straight month and advanced 2.6% on a yearly basis, the Labor Department's Bureau of Labor Statistics said. Leaving out the unpredictable food and energy parts, the CPI increased 0.3%. in October, conference economists' forecasts.

After the report, traders' bets showed a more than 82%. possibility for a 25 basis-point rates of interest cut at the Fed's. December conference, up from 58.7% on Monday, according to CME. group's FedWatch tool.

While some Fed authorities sounded more cautious on Wednesday,. Minneapolis Fed President Neel Kashkari informed Bloomberg television that. he was confident inflation was headed down, noting that the CPI. data validates that down course.

There's some relief inflation didn't been available in ahead of. expectations. That was an issue entering today's CPI. report, said Angelo Kourkafas, senior investment strategist at. Edward Jones. The truth we got an ideal in-line number assisted. reduce a few of those worries. Nothing we saw today from today's. data refutes a December rate cut.

Outperformance in the consumer discretionary sector index. , up more than 1% on the day, was likely due to bets on. rate cuts, according to Kourkafas.

Still, Dallas Federal Reserve President Lorie Logan said the. U.S. central bank need to continue very carefully on additional interest. rate cuts to keep from inadvertently re-igniting inflation.

St. Louis Fed President Alberto Musalem said the Fed remains in. the last mile of its inflation battle though recent data raised. the risk that progress may slow or reverse, on Wednesday.

According to initial data, the S&P 500. gotten 2.98 points, or 0.05%, to end at 5,986.97 points,. while the Nasdaq Composite lost 45.18 points, or 0.23%,. to 19,236.22. The Dow Jones Industrial Average increased 50.22. points, or 0.11%, to 43,960.43.

Also suggesting December rate cut bets, U.S. Treasury. 2-year yields fell greatly after the inflation. report.

However, the benchmark 10-year yield gained back. ground it lost after the data and increased as high as 4.46% as. investors focused on longer-term expectations that. President-elect Donald Trump's policies could worsen. inflation.

Regardless of inflation concerns, financiers are enthusiastic of a. pro-business position and possible tax cuts from the inbound U.S. president. Media outlets predicted on Wednesday that the. Republican politician Party had actually won a majority in the House of. Agents as well as the Senate.

The marketplace has already responded rather positively to the. election news, stated Venu Krishna, head of U.S. equity method. and worldwide equity-linked techniques at Barclays. A great deal of the. optimism is baked in but what's not baked in fully is a few of. the unpredictability that features certain substantial policy. postures.

But while Krishna sees upside momentum for threat properties from. Republican policies, he said the market is competing with. issues that rates, inflation and valuations are larger. headwinds now than they were in 2016, the last time Trump became. president.

In specific shares, Spirit Airlines' shares. plunged on Wednesday after a report the U.S. carrier is. preparing to file for bankruptcy defense, while the company. said it is talking with financial institutions.

Shares of EV maker Rivian skyrocketed after Volkswagen. on Tuesday raised its investment in the business by. 16% to $5.8 billion.

(source: Reuters)