Stock Market Today: Stocks higher with inflation data set to test historic November rally

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U.S. equity futures moved higher Thursday, while Treasury bonds extended the best monthly rally since the global financial crisis, as investors looked to close out the solid November rally on a high note while eyeing key inflation data and and OPEC decision on production cuts later in the session.

The S&P 500, the broadest measure of U.S. stocks, is on pace for its best monthly gain in two years, and one of the four or five best months on record, with an 8.6% advance powered by a pullback in Treasury yields and a slumping U.S. dollar. 

Benchmark 10-year note yields have fallen around 60 basis points so far this month, and were last marked at an early September low of 4.288% in overnight dealing, amid renewed bets that the Federal Reserve is not only done with its rate-hiking cycle, the most aggressive in four decades, but will begin cutting rates as soon as the first quarter of next year.

Inflation data later this morning could test that theory, although economists expect to see another overall decline in the Fed’s preferred gauge, the Core PCE Price Index, which is expected to ease to an annual rate of 3.5% with a monthly advance of just 0.2%.

A benign reading could accelerate the market’s assumption of Fed rate cuts, which the CME Group’s FedWatch suggest could happen as early as March, while a stronger reading could trigger a spike to Treasury bond yields and act as a headwind for stocks on the final trading day of the month. 

Markets will also be tracking developments at today’s virtual OPEC+ meeting, which was delayed from last week, as the cartel and its non-member allies, such as Russia, attempt to reach an agreement that will extend production cuts into early next year and beyond.

Brent crude contracts for January delivery, the global pricing benchmark, were up $1.05 in overnight trading at $84.15 per barrel while WTI futures for the same month, which are tightly-linked to domestic gas prices, added 95 cents to change hands at $78.68 per barrel.

On Wall Street, stocks look set for a modestly firmer open, with futures contracts tied to the S&P 500 indicating a gain around 9 points, with a 9% surge for Salesforce  (CRM) – Get Free Report on the back of stronger-than-expected third quarter earnings helping the Dow Jones Industrial Average to a 185 point advance.

The tech-focused Nasdaq, which is up 10.95% for the month and a staggering 36.2% for the year, is set for another 40 point bump with investors likely focused on Tesla’s  (TSLA) – Get Free Report first deliveries of its long-delayed Cybertruck. 

In overseas markets, Europe’s Stoxx 600 was marked 0.3% higher in early Frankfurt trading, with traders eying the release of PCE inflation data later in the U.S. session after Eurostat figures showed inflation in the region easing to 2.4% in November, down from the 2.9% recorded in October and the 10.6% peak rate reached last year.

Britain’s FTSE 100, meanwhile, gained 0.5% in London.

Overnight in Asia, another weak data reading from China, which showed its powerhouse manufacturing sector contract for a second consecutive month, lead to a mixed session for China-based stocks, but gains elsewhere helped the region-wide MSCI ex-Japan index rise 0.22% to take its November gain to just under 7%, the strongest advance in 10 months. 

Japan’s Nikkei 225, which hit a fresh 33-year high earlier this month, closed out the month with a 0.5% gain that pegged the index at 33,486.89, lifting its November advance to around 8.5%. 

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