U.S. Stocks Give Back Ground After Early Rally But Remain Mostly Positive

Stocks moved sharply higher in early trading on Tuesday but have given back ground over the course of the session. The major averages have pulled back well off their highs of the session, with the Dow briefly dipping below the unchanged line.

Currently, the major averages are all in positive territory. The Dow is up 81.20 points or 0.2 percent at 34,086.24, the S&P 500 is up 24.57 points or 0.6 percent at 4,015.13 and the Nasdaq is up 101.16 points or 0.9 percent at 11,244.89.

The early rally on Wall Street came following the release of a report from the Labor Department showing consumer prices in the U.S. inched up by less than expected in the month of November.

The Labor Department said its consumer price index crept up by 0.1 percent in November after climbing by 0.4 percent in October. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices edged up by 0.2 percent in November after rising by 0.3 percent in October. Core prices were expected to show another 0.3 percent increase.

The report also showed the annual rate of growth by consumer prices slowed to 7.1 percent in November from 7.7 percent in October.

The year-over-year increase in November, which came in below economist estimates for a slowdown to 7.3 percent, reflects the slowest annual growth since December 2021.

The annual rate of growth by core consumer prices also slowed to 6.0 percent in November from 6.3 percent in October, while economists had expected price growth to slow to 6.1 percent.

Buying interest waned over the course of the morning, however, as traders seemed reluctant to make significant beats ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is widely expected to raise interest rate by another 50 basis points, with traders likely to pay close attention to the accompanying statement for clues about the outlook for future rate hikes.

Sector News

Despite the pullback by the broader markets, oil service stocks continue to see substantial strength, driving the Philadelphia Oil Service Index up by 3.6 percent.

The rally by oil service stocks comes amid a sharp increase by the price of crude oil, with crude for January delivery spiking $2.77 to $75.94 a barrel.

A jump by the price of gold is also contributing to continued strength among gold stocks, as reflected by the 2.6 percent surge by the NYSE Arca Gold Bugs Index.

Biotechnology, housing and commercial real estate stocks also continue to see considerable strength but have pulled back off their best levels of the day.

Meanwhile, airline stocks have come under pressure over the course of the session, dragging the NYSE Arca Airline Index down by 2.7 percent.

United Airlines (UAL) is posting a steep loss after announcing an order for 100 of Boeing’s (BA) 787 Dreamliners with options to purchase 100 more.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index rose by 0.4 percent, while China’s Shanghai Composite Index edged down by 0.1 percent.

Meanwhile, the major European markets all showed strong moves to the upside on the day. While the U.K.’s FTSE 100 Index advanced by 0.8 percent, the German DAX Index and the French CAC 40 Index jumped by 1.3 percent and 1.4 percent, respectively.

In the bond market, treasuries have pulled back off their best levels but remain sharply higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 10.8 basis points at 3.503 percent.

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