Stock Market Today: Stocks edge higher as key inflation reading tests autumn rally

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U.S. equity futures Tuesday nudged higher Tuesday while Treasury yields retreated and the dollar gave back gains against its global peers as investors parsed through a key inflation reading ahead of the Federal Reserve's two-day policy meeting in Washington.

Updated at 8:43 AM EST

Sticky wicket

The Commerce Department's November inflation report was largely as advertised, with a headline reading of 3.1% and a modestly quicker monthly gain of 0.1%.

Sticky core prices, however, which held at an annualized rate of 4%, may complicate the Fed's near-term rate messaging as policymakers begin their two-day meeting in Washington.

Stocks were little-changed from the release, with futures tied to the S&P 500 indicating a 9 point opening bell gain and 10-year Treasury yields rising 2 basis points to 4.218%.

Related: Inflation slows again in November, but stubborn core supports Fed rate caution

Updated at 7:41 AM EST

Darkening Mood?

The National Federation of Independent Business, a lobby group representing the backbone of American industry, noted a modest dip in its small business optimism index in November amid a longer pullback in capital spending plans and increased difficulty in obtaining bank credit.

The downside move, while modest, suggests the kinds of pressure the bulk of American companies face from the Fed's "higher-for-longer" rate mantra, and its broader efforts to tame inflation, heading into the coming year. 

Stock Market Today

Economists are looking for a modest easing in headline inflation over the month of November, with year-on-year reading of 3.1%, amid a big month-on-month decline in gasoline prices. Core price pressures, meanwhile, are likely to hold at an annualized rate of 4% thanks in part to downside moves for rents and non-housing services costs.

Data from the New York Fed yesterday showed inflation expectations in fact fell to the lowest levels in more than two years, following a similar reading from the University of Michigan's consumer-confidence survey last week.

Collectively, the assessments, as well as a solid auction of $37 billion in reopened 10-year notes, clipped U.S. Treasury yields ahead of today's CPI data. The benchmark paper was marked 10 basis points (0.1 percentage point) lower from yesterday's auction levels at 4.193%. 

The Treasury will also auction $21 billion in 30-year bonds later in the session.

The U.S. dollar index, meanwhile, was marked 0.33% lower against a basket of six global currency peers. It was trading at 103.75 in early New York dealing, reflecting both bets on a near-term Fed interest-rate cut but also upside moves in both the pound and the euro ahead of their respective central-bank rate decisions later this week.

Global oil prices were also trending lower, with WTI crude down 21 cents on the session at $71.11 a barrel. That's before a private-sector reading of domestic U.S. stockpiles from the American Petroleum Institute later in the session.

On Wall Street, futures tied to the S&P 500 are indicating a 3 point opening bell gain while those tied to the Dow Jones Industrial Average are suggesting a 70 point advance. Futures tied to the Nasdaq, meanwhile, are indicating a 32 point bump.

In overseas markets, European stocks were little changed from last night's close, and holding near the highest levels since March, ahead of the U.S. CPI data release. The Stoxx 600 was marked 0.08% lower in early Frankfurt dealing and Britain's FTSE 100 rose 0.4% in London. 

Overnight in Asia, investors were focused on high-level meetings between Communist Party officials in Beijing that some analysts speculate could lead to deeper fiscal stimulus for China's moribund economy.

The regionwide MSCI ex-Japan index was marked 0.58% higher heading into the close of trading while the Nikkei 225 ended 0.16% higher in Tokyo.

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