S&P 500 and Nasdaq Gain, Crude Oil Drops as CPI Awaits, Reports Reuters

By Stephen Culp

NEW YORK – The Dow and Nasdaq showed gains on Tuesday, while oil prices dropped to a 3-1/2-year low amid concerns regarding weakening global demand, just a day before the release of crucial inflation data.

Market participants were preparing for the Labor Department’s consumer price index report and the first debate between Vice President Kamala Harris and former President Donald Trump, both of whom are in a tight competition for the presidency.

Recent data from China indicated a rise in exports, likely in anticipation of stricter tariffs from trading partners, including the incoming U.S. administration.

Large technology companies contributed to the Nasdaq’s gains, while the S&P 500 saw modest increases, and the Dow finished in negative territory.

"It really feels like today is kind of a calm before the storm," remarked Ryan Detrick, chief market strategist at Carson Group in Omaha. "With the presidential debate tonight and the CPI inflation data due tomorrow, investors are in a holding pattern with little major buying or selling."

Financial stocks faced pressure following Federal Reserve Vice Chair for Supervision Michael Barr’s announcement of comprehensive revisions to bank capital plans. This sector was further unsettled by a warning from JPMorgan Chase regarding reduced interest income as rates are expected to decline.

The warning from JPMorgan Chase serves as a reminder that "there still are some cracks in the economy as we head into the end of the year," Detrick noted.

Analysts anticipate that Wednesday’s CPI report will show inflation moving closer to the Federal Reserve’s 2% target, which aligns with Fed Chair Jerome Powell’s view that price growth is manageable. Concerns about a softening labor market lead many to believe a rate cut is imminent.

Current market expectations indicate a 71% probability that the central bank will reduce its Fed funds target rate by 25 basis points during its upcoming policy meeting, with a 31% chance of a 50 basis point reduction, according to market analysis tools.

"Investors are focused on what the Fed will do and on upcoming economic reports," stated Oliver Pursche, senior vice president at Wealthspire Advisors in New York. "So far, the data suggests a soft landing or a very mild recession is most likely."

The Dow fell by 92.63 points, or 0.23%, to close at 40,736.96; the S&P 500 rose by 24.47 points, or 0.45%, to 5,495.52; and the Nasdaq increased by 141.28 points, or 0.84%, to 17,025.88.

European markets declined, with bank and energy stocks under pressure as investors adopted a cautious approach ahead of the U.S. inflation data and an expected rate cut from the European Central Bank later in the week.

The pan-European index dropped 0.54%, while a global stock gauge gained 0.17%. Emerging market stocks fell by 0.07%, with the broader Asia-Pacific index outside of Japan closing up 0.07%, while Japan’s index dipped 0.16%.

U.S. Treasury yields fell ahead of the debate and subsequent CPI report. Benchmark 10-year notes rose in price, yielding 3.6479%, down from 3.699% earlier, while the 30-year bond saw a yield drop to 3.9648%.

The dollar experienced slight gains against a basket of currencies, with the euro declining to $1.1026. The Japanese yen strengthened against the greenback at 142.33 per dollar, while the British pound was trading at $1.3085, up 0.10%.

Oil prices fell sharply, with Brent crude dipping below $70 per barrel for the first time since December 2021 as OPEC+ revised down its demand forecasts, countering potential supply concerns from Tropical Storm Francine. West Texas Intermediate crude dropped 4.31% to settle at $65.75 per barrel, while Brent settled down 3.69% at $69.19 per barrel.

Gold prices rose above the $2,500 mark as investors positioned themselves ahead of the CPI report, with prices climbing 0.5% to $2,516.61 an ounce.