#Market Snapshot: Dow fights for gains as stock market wobbles in attempt to wave off hottest CPI in nearly 40 years

What’s driving the markets?

Investors were interpreting the consumer inflation data as not as bad as the worst-case-scenario for Wall Street.

Data released ahead of the stock market open on Wall Street showed November consumer price inflation rose 6.8% annually, slightly higher than expectations for a rise of 6.7% by a poll of economists by The Wall Street Journal. It marks the fastest annual inflation rate since 1982.

The cost of living rose 0.8% on the month, just ahead of expectations for a 0.7% gain. Core inflation, which strips out food and energy costs, jumped 0.5% in November as expected, while core inflation year-over-year in November rose 4.9%.

“The in-line year on year reading plus the slight move lower in the monthly read appears to have eased bets of a sooner rate rise by the Fed,” wrote Fiona Cincotta, senior financial markets analyst at City Index, in a market brief. The analyst said that the market also may have “built itself up for a much higher reading.”

“The initial reaction has seen the US dollar fall and stocks rise with high growth tech stocks leading the charge; moves consistent with easing hawkish Fed expectations. However, the initial knee jerk reaction isn’t always the one that stays,” the City Index analyst cautioned.

The consumer inflation report now sets the stage for next week’s Federal Open Market Committee meeting after the central bank telegraphed its plans to increase the pace of monetary policy tightening, at least inasmuch as tapering bond purchases is concerned.

“For policy, this report increases the probability that the Fed will announce an accelerated tapering at its December meeting, which markets are already expecting,” wrote Alex Pelle, U.S. economist at Mizuho, in a Friday note.

“At the current pace of inflation, the economy would be on track to average 2% inflation over two business cycles (since the Great Financial Crisis) by next year,” Pelle wrote. “As such, we expect the December SEP ‘dot plot’ will show at least 2 hikes at the median in 2022, with a risk that it shows 3 hikes at the median for 2022”, the economist wrote, referring to the chart of the interest-rate projections from members of the FOMC.

The Fed will meet Dec. 14-15.

Meanwhile, a report on consumer sentiment from the University of Michigan’s gauge rebounded in December to 70.4 from a final November reading of 67.4. Economists polled by The Wall Street Journal expected an index reading of 68.0. 

See also: Household wealth has surged an astonishing $36 trillion. What that means for markets.

What companies are in focus?

• Shares of Oracle Corp.
  ORCL,
  +15.85%
  climbed after the database giant reported forecast-beating fiscal second-quarter results.

• Broadcom 
  AVGO,
  +7.67%
  shares rose 6% after the chip and software company announced an aggressive plan to return shareholder cash following an earnings beat.

• Chewy
  CHWY,
  -10.18%
  stock slid after the online retailer of pet food and other pet-related products reported fiscal third-quarter results late Thursday.

• Peloton Interactive Inc.
  PTON,
  -5.09%
  shares fell after the maker of home-exercise equipment was cut to neutral from outperform at Credit Suisse, which slashed its price target to $50 from $112. Shares slid 11% on Thursday, amid publicity over a plot twist in the “Sex and the City” revival.

How are other assets trading?

• The yield on the 10-year Treasury note
  TMUBMUSD10Y,
  1.472%
   retreated 1.2 basis points to 1.47%, after pitching higher early Friday. Treasury yields and prices move in opposite directions.

• The ICE U.S. Dollar Index 
  DXY,
  -0.28%,
  a measure of the currency against a half-dozen other monetary units, was little changed at 96.268 and off less than 0.1% thus far in the week.

• In oil futures, West Texas Intermediate crude 
  CL00,
  +0.48%
   for January delivery 
  CLFFX,
  -1.06%
   rose 29 cents, or 0.4% to $71.19 a barrel on the New York Mercantile Exchange and was on track for a 7.7% weekly surge.

• Gold futures 
  GC00,
  +0.51%
  for February delivery 
  GCG22,
  +0.51%
  rose 0.2% to $1,780.10 an ounce and was headed for a flat finish for the week.

• The Stoxx Europe 600 Index 
  SXXP,
  -0.30%
  closed 0.3% lower on Friday but finished the week 2.8% higher, while London’s FTSE 100 Index 
  UKX,
  -0.40%
  fell 0.4% but put in weekly advance of 2.4%.

• In Asia, the Shanghai Composite Index
  SHCOMP,
  -0.18%
  closed 0.1% lower, while the Hang Seng Index 
  HSI,
  -1.07%
   fell 1% in Hong Kong but booked a 1% weekly climb, and China’s CSI 300 
  000300,
  -0.46%
  fell 0.5% but boasts a 3.1% weekly rally. Japan’s Nikkei 225 Index 
  NIK,
  -1.00%
   closed down 1% but notched a 1.5% rose over the five-day period.