Dow Jones falls for fourth straight session as caution prevails ahead of CPI data – CNBC TV18

US markets continued to retreat from record high levels as caution prevailed ahead of the all important inflation data which will be reported later this evening, Indian Standard Time.

The S&P 500 and the Nasdaq fell for the second day, declining 0.3% each, while the Dow Jones fell over 150 points, sliding for the fourth day in a row.

Alphabet Inc. rallied as analysts applauded the Google parent’s announcement of a major development in quantum computing through the use of its Willow quantum chip. Homebuilders got hit as Toll Brothers Inc.’s profit-margin projection fell short of estimates. Oracle Corp. sank on uninspiring results.

Wednesday’s CPI will offer Fed officials a final look at the pricing environment ahead of their next meeting. Any indication that inflation progress has stalled could well undercut the chances of a rate cut. For now, swap trading projects an 80% chance of a quarter-point Fed reduction this month.

The market is pricing in the smallest implied reaction to CPI since 2021, according to Bank of America Corp. strategists, who argue the readout will matter more this time.

“A softer print can clear the path for a year-end rally, with the second half of December being the second strongest period of the year,” a team led by Ohsung Kwon said. “On the contrary, a firmer print can revamp volatility,” particularly after the post-election rally.

Treasury 10-year yields rose two basis points to 4.22%. The Bloomberg Dollar Spot Index added 0.1%.

A survey conducted by 22V Research shows that 37% of investors expect the market reaction to CPI to be “risk-off.” There is an even split between the percentage of investors who bet the reaction will be “risk-on” and “mixed/negligible.”

To Bret Kenwell at eToro, one metric to watch is year-over-year core CPI, which has been at 3.3% in each of the last two months. Current expectations again call for 3.3%.

“An in-line or lower reading likely cements a rate cut, while a higher-than-expected result could create some doubt over whether the Fed should cut rates again,” he noted.

Dan Wantrobski at Janney Montgomery Scott says technical gauges suggest some caution into year-end.

“We are currently seeing/hearing a tremendous amount of bullishness ramping up for 2025- from strategist reports, economist forecasts, and from the investment community in general,” he said. “This, in our opinion, may at some point become a contrarian indicator, as many areas of the markets remain overbought heading into the new year.”

(With Inputs From Agencies.)