Wall Street struggled to maintain momentum on a pivotal trading day as investors digested inflation data and assessed the Federal Reserve’s next move. The Dow Jones Industrial Average and S&P 500 both dropped 0.5%, while the Nasdaq Composite shed 0.6%. Despite the broader sell-off, Apple (AAPL) bucked the trend, closing at a record high, up less than 1%.
Adding to the day’s uncertainty, the 10-year Treasury yield rose 5 basis points to 4.32%, its highest closing level since late November, signaling persistent concerns about inflation and interest rates.
Investors received another critical inflation update with the release of November’s Producer Price Index (PPI), which showed a 0.4% monthly increase, double the expected 0.2% rise. The report follows an in-line Consumer Price Index (CPI) reading earlier in the week that had boosted optimism for a quarter-point rate cut in December, now seen as a near-certainty at 99%, according to the CME FedWatch Tool.
The hotter-than-expected PPI has, however, reignited concerns about whether the Fed will hold rates steady in January. Several Fed officials have recently signaled a cautious approach to monetary easing, underscoring their concerns about entrenched inflationary pressures.
Adding to the market’s downbeat tone, Adobe (ADBE) issued a disappointing revenue forecast, reflecting challenges in capitalizing on its AI investments. The tech giant’s shares plummeted nearly 14%, marking one of the steepest declines among major tech stocks.
Adobe’s forecast highlights broader concerns about the payoff timelines for artificial intelligence initiatives, a theme that has driven much of the market’s tech rally in 2023.
Investors are now closely monitoring the Federal Reserve’s December meeting, with attention shifting to whether the central bank will adjust its tone on monetary easing in light of the latest inflation data.
As the end of the year approaches, the market’s ability to weather mixed signals from inflation and earnings reports will be critical to sustaining recent gains.
