CNBC Daily Open: U.S. inflation edged up but investors aren’t fazed

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Inflation in October ticked up
The personal consumption expenditures price index for October ticked up 0.2% on the month and 2.3% on a 12-month basis, according to the U.S. Commerce Department on Wednesday. Core inflation rose 0.3% on the month and showed an annual reading of 2.8%, higher than September’s 2.7%. All figures were in with Dow Jones consensus estimates.

U.S. markets break rally
U.S. stock markets fell on Wednesday, with  the S&P 500 snapping its seven-day winning streak. Bond prices rose as Treasury yields slipped. The pan-European Stoxx 600 lost 0.19%. Shares of Just Eat Takeaway dropped 2.7% after the Anglo-Dutch delivery firm said it will delist from the London Stock Exchange next month.

Bitcoin rebounded
Bitcoin rose 5.4% to $96,169.36 as of Thursday morning, bouncing back from a weekly low of around $90,700. Notably, the movement of bitcoin moved in opposite directions from U.S. indexes, which fell on Wednesday. “The bitcoin bull market has legs,” Alex Thorn, head of firmwide research at Galaxy Digital, wrote in a report Wednesday.

Tariffs on Europe’s auto industry?
It’s likely the euro zone is worried that U.S. President-elect Donald Trump will soon announce tariffs on the bloc’s auto industry. “The industry is linked eventually to the steel industry and the chemical industry, so it is the full supply chain that’s involved here,” said Rico Luman, senior sector economist for transport and logistics at Dutch bank ING.

[PRO] Magnificent financial stocks
Despite the market chatter about the “Magnificent Seven” bag of stocks, financial stocks have been the best-performing group so far in 2024. Within that sector, there is a corner that might do exceptionally well.

The SPDR S&P 500, an exchange-traded fund that tracks the broad-based index, traded around 22.6% fewer shares than its 30-day average.

So even though the S&P fell 0.38% to break its seven-day winning streak and the Dow Jones Industrial Average slid 0.31%, those moves don’t seem to be a sell-off sparked by mass panic.

Instead, traders appear to be giving thanks to the year’s rally in Big Tech stocks by taking profit on them, which caused the Nasdaq Composite to drop a relatively steeper 0.6%.

The fact that inflation in the U.S., on an annualized basis, ticked up by 0.1 percentage point from the previous month didn’t seem to faze investors much either, probably because it wasn’t an unexpected increase.

In fact, traders boosted their bets that the U.S. Federal Reserve will lower rates by 25 basis points at its December meeting. The market is pricing in a 64.7% chance of that happening, higher than the 55.7% of a week ago, according to the CME FedWatch tool.

“Today’s data shouldn’t change views of the likely path for disinflation, however bumpy,” said David Alcaly, lead macroeconomic strategist at Lazard Asset Management.

Echoing his views, Scott Helfstein, Global X’s head of investment strategy, says he thinks the Fed “can eat turkey and watch football for a day knowing that they are close to full employment with price stability.”

Investors can also throw themselves into the festivities. More than three-quarters of stocks in the S&P are above their 200-day moving average, suggesting a steady upward trend and a market “still solid,” according to Chris Verrone, head of the technical and macro research at Strategas.

That’s plenty of things to be grateful for this Thanksgiving.

— CNBC’s Jeff Cox, Scott Schnipper, Alex Harring and Sean Conlon contributed to this report.