Here are the important updates for investors starting their trading day:
1. Gaining Momentum
After a slow start to December, stocks are picking up speed as the year comes to an end. Investors reacted positively to the latest consumer price index reading on Tuesday, causing stocks to rise for another day. There’s growing anticipation for the Federal Reserve to lower its benchmark rate next year.
Both the Dow and the S&P 500 reached their highest levels since January 2022, and the Nasdaq reached its highest point since April 2022. Now, all attention is on the Fed, which is expected to keep its rate unchanged at its 2 p.m. ET announcement on Wednesday. (More details below.) The November producer price index, an important measure of wholesale inflation, is set to be released at 8:30 a.m.
2. What to Expect From the Federal Reserve
While the market doesn’t anticipate any changes to interest rates on Wednesday, investors will closely watch the statements from Chair Jerome Powell and other policymakers. Economists and analysts believe that the Fed’s announcement will strongly suggest the end of its cycle of raising interest rates as the robust economy begins to slow down.
Regarding the Fed’s economic outlook, it suggests that investors shouldn’t anticipate significant changes. However, Powell’s press conference might be more intriguing, as reporters are likely to question him about when he envisions the central bank starting to reduce rates.
3. Wake-Up Call for Oil Market
Following intense discussions and passionate protests, almost 200 nations, gathered at the United Nations’ COP28 summit in Dubai, reached an agreement to shift away from fossil fuels.
The significant deal aimed at addressing climate change involves “transitioning away from fossil fuels in energy systems, in a fair, organized, and equitable manner, speeding up actions in this crucial decade to achieve net zero by 2050 in accordance with scientific findings,” as stated in the proposal.
Meanwhile, those optimistic about oil are facing challenges as traders consider less aggressive but persistent inflation and declining demand from China.
On Tuesday, the West Texas Intermediate crude contract for January dropped nearly 4%, settling at $68.61 per barrel, while the Brent contract for February declined over 3.5% to $73.24.
4. Behind the Curtain
After a span of several years, Netflix is finally providing the public with a more comprehensive glimpse into its viewership data. The streaming giant unveiled its inaugural “What We Watched” report on Tuesday, sharing details about over 18,000 titles.
Co-CEO Ted Sarandos informed reporters, “This is the actual data that we use to run the business. I’m the co-CEO of a public company, so sharing bad information has consequences.”
The decision to release this data follows resolved disputes between Netflix, other Hollywood studios, and the actors’ and writers’ unions. Both unions had previously criticized Netflix for not being transparent enough about its audience numbers. Netflix plans to issue a “What We Watched” report every six months.
5. Bidenomic Anxiety
As inflation decreases, Americans are beginning to feel more positive about the economy, as indicated by two recent surveys. Despite a slight cooling of the economy, job growth remains strong, the unemployment rate is consistently low, and wages are increasing. This could potentially work in favor of President Joe Biden as he approaches a reelection year.
However, current polls show that he is still facing challenges with voters who have not embraced his economic messaging, known as Bidenomics. Biden is aware of this, evident in his response to Tuesday’s consumer price index.
While acknowledging the slowing inflation, he emphasized that it has not yet reached the desired level. Biden stated, “Despite this progress, I know many Americans still find too many things unaffordable,” and pledged to “keep fighting to bring down costs.”
Summary
Stocks are gaining momentum as December progresses, with positive reactions to the latest consumer price index. Attention shifts to the Federal Reserve’s potential rate decisions. An international agreement at COP28 signals a move away from fossil fuels, impacting the oil market. Netflix’s transparency, Biden’s economic concerns, and pledges to address affordability add complexity to the economic world.
