Equity futures are climbing ahead of inflationary pressures

US stocks faltered during afternoon trading, lifting gains from an early Tuesday explosion fueled by new inflation data that showed prices rose less than expected last month.

The S&P 500 (^GSPC) rose 0.3%. The Dow Jones Industrial Average (^DJI) fell 0.1% during afternoon trading, reversing a 2% gain from earlier in the session. The tech-intensive Nasdaq Composite (^IXIC) gained 0.2%.

The jump in stocks comes after data from the BLS showed that prices rose 0.1% in November from the previous month and 7.1% from the previous year. Tuesday’s data was viewed by investors as potentially encouraging the Federal Reserve to taper off its aggressive rate hikes early next year.

“While this is the second consecutive month of lower-than-expected inflation, we don’t think this will change anything at tomorrow’s Fed meeting. We still expect a 50 basis point increase, but what matters is guidance,” Gina Bolvin, president of Bolvin Wealth Management Group, wrote in a statement in response to the inflation data.

Following the inflation data and amid the ensuing equity rally, the dollar plummeted against most major currencies and bitcoin (BTC-USD) rallied as much as 5% to nearly $18,000.

Yields also fell, with the yield on 10-year Treasuries falling as much as 16 basis points to around 3.45% early Tuesday.

Stocks were up Monday ahead of the inflation report, with the S&P 500 gaining 1.43% to start the new week, with energy, utilities and technology outperforming.

The rally continued early Tuesday as consumer price data came in cooler than expected: Economists polled by Bloomberg had expected headline CPI to rise 7.3% year-over-year and 0.3% from the previous month.

Meanwhile, core CPI, excluding volatile food and energy components, rose 6.0% year-over-year, down from October’s annual increase of 6.1%. The data is the final piece of the puzzle ahead of the Fed’s final policy meeting in 2022, at which the central bank is expected to raise its benchmark interest rate by another 0.50%.

“Indeed, we don’t get many days as significant as the next two, and today’s US CPI and tomorrow’s FOMC will probably be the difference between a big Santa get-together and a visit from Scrooge for Christmas,” Jim Reid and colleagues at Deutsche Bank wrote in an early morning note Tuesday.

In commodity markets, oil prices were higher, with WTI crude up more than 3% to about $75.76 a barrel, driven by China’s easing of COVID-related restrictions.

On the corporate news front, United Airlines (UAL) has placed an order for 100 of Boeing’s first-class 787 Dreamliners with options to purchase 100 more, according to a press release. Shares of United Airlines fell nearly 7% on the news.

Elsewhere in the crypto world, Sam Bankman-Fried, founder and former CEO of bankrupt crypto exchange FTX, was arrested in the Bahamas on Monday after the US filed criminal charges.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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