Wall Street Today | Indexes Close at Year Highs, Market Looks Towards FOMC Decision

U.S. stocks closed at year highs Tuesday afternoon as investors awaited the Federal Reserve’s interest rate announcement Wednesday and hope the latest inflation data doesn’t crimp optimism around rate cuts.

The swings in equities followed an inflation report mostly in line with Wall Street expectations, though slightly warmer than hoped.

But for traders, it’s essentially back to a holding pattern ahead of Wednesday afternoon’s Fed announcement, said Quincy Krosby, chief global strategist for LPL Financial. “The most important thing for the market now is to gain clarity on the Fed’s thinking about the rate cuts,” she told MarketWatch.

The most recent Core CPI Price Index rose with expectations at 0.3% in November. Including food and gas, the CPI index was 0.1%, or 3.1% YoY. The print was “somewhere between bad and good,” Ali Jaffery, economist at CIBC Capital Markets, told MarketWatch.

As Tuesday’s trading session continued, investors were increasingly focused on the sunny side. “Looking under the hood, it is pretty positive,” said Sonu Varghese, global macro strategist at Carson Group, told Dow Jones.

The core inflation numbers were bolstered by bumps for used car and shelter prices, but those price increases will ease in time, Varghese said. “Inflation is going down, but it’s not going down in a straight line.”The central bank is widely expected to leave borrowing costs unchanged at a range of 5.25% to 5.50% after its two-day meeting on Wednesday.

Gold closed with a small loss on Tuesday, sticking under the US$2,000 mark even as the dollar weakened after the United States reported headline inflation eased in November.

Gold for February delivery closed down US $0.50 to settle at US$1,993.20 per ounce.

The drop comes as the United States reported headline inflation declined to 3.1% annualized in November, down from 3.2% in October, while core inflation, excluding volatile food and energy, was unchanged at 4%. Both readings matched expectations, according to Marketwatch.

In a monthly report released Tuesday, the U.S. Energy Information Administration reduced its 2024 forecasts for U.S. and global benchmark oil prices and U.S. natural gas.

The EIA said Brent crude is expected to average $82.57 a barrel in 2024, down 11.4% from the November forecast. The EIA also cut its 2024 forecast for West Texas Intermediate crude prices by 12.5% to $78.07 a barrel. For U.S. natural gas, the government agency forecast prices in 2024 at $2.79 per million British thermal units, down 14.3% from the previous forecast.