Stock market news live updates: Stocks pare gains after soft inflation print

U.S. stocks wavered during midday trading, paring gains from an early Tuesday explosion upward that was sparked by fresh inflation data showing prices rose less than expected last month.

The S&P 500 (^GSPC) advanced by 0.3%. The Dow Jones Industrial Average (^DJI) slipped 0.1% during midday trading, giving up a 2% gain from earlier in the session. The technology-heavy Nasdaq Composite (^IXIC) added 0.2%.

The jump in stocks comes after data from the BLS showed prices in November rose 0.1% over the prior month and 7.1% over the prior year. Tuesday’s data was seen by investors as potentially encouraging for the Federal Reserve to ease off its aggressive rate hikes early next year.

“While this is the second consecutive month of softer-than-expected inflation, we don’t think this will change anything at tomorrow’s Fed meeting. We still expect a 50-basis-point hike, but what matters is guidance,” Gina Bolvin, President, Bolvin Wealth Management Group, wrote in a statement following the inflation data.

Following the inflation data and amid the subsequent stock rally, the dollar tumbled against most major currencies and bitcoin (BTC-USD) surged, rising as much as 5% to approach $18,000.

Yields also dropped, with the yield on 10-year Treasury notes sliding as much as 16 basis points to around to 3.45% early Tuesday.

Stocks had rallied Monday ahead of the inflation report, with the S&P 500 gaining 1.43% to kick off the new week, with energy, utilities, and tech outperforming.

The rally continued early Tuesday as the consumer price data came in cooler than expected: Economists surveyed by Bloomberg had expected headline CPI to rise 7.3% over last year and 0.3% over the prior month.

Meanwhile, core CPI, excluding volatile food and energy components, rose 6.0% year-over-year, down from the 6.1% annual increase seen in October. The data is the final piece of the puzzle before the Fed’s final policy meeting of 2022, at which the central bank is expected to raise its benchmark interest rate by another 0.50%.

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“Indeed, we don’t get many days as important as the next two, and the US CPI today and the FOMC tomorrow are likely to be the difference between a big Santa Claus rally and a visit from Scrooge ahead of Christmas,” Jim Reid and colleagues at Deutsche Bank wrote in an early-morning note Tuesday.

In commodity markets, oil prices were higher, with WTI crude over 3% to around $75.76 per barrel, driven by China’s relaxation of COVID-related restrictions.

On the corporate news front, United Airlines (UAL) has placed an order for 100 of Boeing’s top-of-the-line 787 Dreamliners with options to purchase 100 more, according to a press release. Shares of United Airlines down by nearly 7% on the news.

Elsewhere, in the crypto world, Sam Bankman-Fried, founder and former CEO of bankrupt crypto exchange FTX, was arrested on Monday in the Bahamas after the U.S. filed criminal charges.

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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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