Big Tech Drives Nasdaq Surge As CPI Inflation Aligns With Expectations

In a significant market rally on December 11, 2024, the Nasdaq Composite surged approximately 1.7%, driven by strong performances from major technology stocks. This uptick followed the release of the Consumer Price Index (CPI) data for November, which met economists' expectations, reinforcing predictions of an impending interest rate cut by the Federal Reserve.

Key Takeaways

• The Nasdaq Composite rose 1.7%, while the S&P 500 increased by 0.8%.
• Major tech stocks, including Alphabet, Tesla, and Amazon, reached record highs.
• The CPI data showed a 2.7% annual increase, aligning with forecasts.
• Bitcoin prices soared above $101,300, reflecting investor optimism.

Nasdaq Hits New Heights

The tech-heavy Nasdaq Composite reached a new milestone, climbing to approximately 20,000 for the first time. This surge was largely attributed to the so-called "Magnificent Seven" tech stocks, which include industry giants like Alphabet, Tesla, Meta, and Amazon. These companies collectively drove the market higher, with Alphabet's shares rising over 5% to hit a record high.

CPI Data Meets Expectations

The Bureau of Labor Statistics reported that the CPI increased by 2.7% year-over-year in November, slightly up from October's 2.6%. This data was crucial for investors, as it confirmed that inflation remains persistent but manageable, keeping the Federal Reserve on track for a potential interest rate cut in December.

On a month-over-month basis, the CPI rose by 0.3%, consistent with economists' predictions. The core CPI, which excludes food and energy prices, also increased by 0.3%, maintaining an annual rate of 3.3% for the fourth consecutive month.

Market Reactions

Investors reacted positively to the CPI report, leading to a broad-based rally across major stock indexes. The S&P 500 rose around 0.8%, while the Dow Jones Industrial Average experienced a slight decline of 0.2%. The healthcare sector notably weighed on the Dow, with stocks like Johnson & Johnson and UnitedHealth Group declining.

Bitcoin's Resurgence

In the cryptocurrency market, Bitcoin prices surged past $101,300, reflecting a broader trend of optimism among investors. This increase followed the CPI report, which alleviated some concerns about inflation and its impact on interest rates. Other cryptocurrencies, including Ethereum, also saw significant gains, further boosting the crypto market's momentum.

Looking Ahead

As the Federal Reserve prepares for its upcoming policy meeting, market analysts are closely monitoring inflation trends and their implications for interest rates. The consensus among economists is that the Fed will likely implement a 25 basis point rate cut, with further cuts anticipated in 2025. However, the potential impact of President-elect Donald Trump's policies on inflation remains a key concern for investors.

Overall, the market's response to the CPI data underscores a cautious optimism among investors, particularly in the technology sector, as they navigate the complexities of inflation and interest rate policies.

Sources

• Stock market today: Nasdaq tops 20,000 for first time as Big Tech surges, Tesla hits first record in 3 years, Yahoo Finance.
• Stock market today: Nasdaq tops 20,000 for first time as Big Tech surges, Tesla hits first record in 3 years, Yahoo Finance.
• Stock market today: Nasdaq tops 20,000 for first time as Big Tech surges, Tesla hits first record in 3 years, Yahoo Finance.
• Wall Street Sends Big Tech to Fresh Highs Post-CPI: Markets Wrap, Yahoo Finance.
• Stocks jump on heels of CPI print, bitcoin soars: Yahoo Finance, Yahoo Finance.