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Market Snapshot

https://www.briefing.com/stock-market-update

Dow 35970.99 +216.30 (0.60%)
Nasdaq 15630.59 +113.23 (0.73%)
SP 500 4712.02 +44.57 (0.95%)
10-yr Note +26/32 1.458
NYSE Adv 1551 Dec 1733 Vol 827.5 mln
Nasdaq Adv 1849 Dec 2713 Vol 4.3 bln

Industry Watch
Strong: Information Technology, Consumer Staples
Weak: Financials

Moving the Market

-- S&P 500 closes at a record high following hot CPI data for November

-- Total CPI increased 0.8% m/m (Briefing.com consensus 0.6%), leaving it up 6.8% yr/yr

-- Treasury market held its ground

-- Oracle (ORCL), Broadcom (AVGO), and Costco (COST) rally on positive earnings news

-- Small-caps and micro-caps struggled to attract buying interest

S&P 500 notches record close following hot CPI data
10-Dec-21 16:20 ET
Dow +216.30 at 35970.99, Nasdaq +113.23 at 15630.59, S&P +44.57 at 4712.02

[BRIEFING.COM] The S&P 500 rose 1.0% on Friday, and closed at a record high, following a hot Consumer Price Index (CPI) report for November. The Nasdaq Composite (+0.7%) and Dow Jones Industrial Average (+0.6%) also posted decent gains, and like the S&P 500, ended the week with gains over 3.5%.

All 11 S&P 500 sectors closed higher, with the information technology sector (+2.1%) being the biggest and most influential gainer. The financials sector (+0.1%) underperformed on a relative basis with a 0.1% gain.

Not all stocks reacted positively to the CPI report, though. The small-cap Russell 2000 (-0.4%) and the iShares Micro-Cap ETF (IWC 138.77, -1.12, -0.8%) both closed lower. Declining issues outpaced advancing issues at both the NYSE and Nasdaq.

Specifying the data, total CPI increased 0.8% m/m in November (Briefing.com consensus 0.6%), leaving it up 6.8% yr/yr -- its highest level since 1982. Core CPI, which excludes food and energy, increased 0.5% m/m, as expected, and was up 4.9% yr/yr.

The report wasn't too surprising given all the commentary about increased inflation pressures and the in-line core CPI print. Some investors took the data at face value: inflation is a byproduct of economic growth and offers companies pricing power for greater earnings potential.

As an aside, Oracle (ORCL 102.63, +13.86, +15.6%), Broadcom (AVGO 631.68, +48.26, +8.3%), and Costco (COST 558.82, +34.49, +6.6%) each rallied noticeably on pleasing earnings results, with ORCL and AVGO also announcing plans to repurchase $10 billion worth of stock.

Separately, based on the counter-intuitive price action in Treasuries, there was a tolerance for the view that inflation pressures could be peaking, which was espoused by the White House yesterday. Treasury yields were mixed and little changed, which was seen as a source of comfort for the stock market.

The 10-yr yield settled unchanged at 1.49% after trading at 1.51% prior to the CPI data. The 2-yr yield decreased two basis points to 0.66%, even though the report not only supported the case for the Fed be more aggressive with its tapering plan but also to think about hiking rates three times next year.

The U.S. Dollar Index decreased 0.2% to 96.06. WTI crude futures rose 1.2%, or $0.83, to $71.70/bbl.

Reviewing Friday's economic data, which featured the Consumer Price Index for November:

The latest Consumer Price Index (CPI) showed total CPI increased 0.8% month-over-month in November (Briefing.com consensus 0.6%) while core CPI, which excludes food and energy, increased 0.5%, as expected. On a year-over-year basis, total CPI was up 6.8%, versus 6.2% in October, and was the highest it has been since June 1982. Core CPI was up 4.9% year-over-year, versus 4.6% in October.
There isn't just one key takeaway from this report. There are many:
The Fed totally missed the mark with its transitory inflation view.
The inflation data make it clear that the Fed is going to announce a more aggressive tapering path at next week's FOMC meeting.
These data should stir concerns about a third rate hike being in the mix for 2022.
Inflation pressures are broad based.
Nominal wage gains will be undercut by inflation that will limit real spending growth potential.
The elevated inflation print will stand as a political pressure point.
The preliminary December University of Michigan Index of Consumer Sentiment increased to 70.4 (Briefing.com consensus 68.0) from the final November reading of 67.4.
The key takeaway from the report is the finding that inflation, versus unemployment, was seen as the more serious risk to the economy across all income, age, education, region, and political subgroups.
The U.S. Treasury reported a $191.3 bln deficit for November to follow last month's $165.06 bln deficit. The deficit one year ago was $145.27 bln.

There is no economic data scheduled for Monday.

S&P 500 +25.5% YTD
Nasdaq Composite +21.3% YTD
Dow Jones Industrial Average +17.5% YTD
Russell 2000 +12.0% YTD

Crude futures settle higher
10-Dec-21 15:30 ET
Dow +147.88 at 35902.57, Nasdaq +56.89 at 15574.25, S&P +31.06 at 4698.51

[BRIEFING.COM] The S&P 500 is up 0.7% and is vying for a record close, which is about six points higher than the current level.

One last look at the sectors shows information technology (+1.6%) and consumer staples (+1.9%) leading the advance with gains over 1.5%. The communication services (-0.1%) and financials (-0.1%) sectors trade lower.

WTI crude futures settled higher by 1.2%, or $0.83, to $71.70/bbl.