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Investors Cheer Muted Inflation Data
The Wall Street Journal|January 16, 2025
Markets cheered a December inflation report that suggested underlying price pressures are easing, but the Federal Reserve still isn't likely to cut interest rates anytime soon given President-elect Donald Trump's plans for the economy.
- PAUL KIERNAN
Investors Cheer Muted Inflation Data

The overall consumer-price index came in relatively hot, rising 2.9% over the year, the Labor Department said Wednesday. The index rose 0.4% from the previous month, driven by a 4.4% jump in gasoline prices.

The so-called core CPI, which excludes volatile food and energy prices, rose 0.2%, its smallest gain since July and less than the 0.3% increase expected by economists.

Investors homed in on the core prices, sending stocks and bonds higher. But the data aren't significant enough to change Fed officials' plan to hold interest rates steady while they await the tariffs, tax cuts and immigration crackdown that Trump has promised to deliver. The Fed meets in two weeks and has widely telegraphed that it is taking a break from rate cuts.

The three major U.S. stock indexes all recorded their best day since the post-election rally on Nov. 6. The Dow Jones Industrial Average rose by more than 700 points, with both that index and the S&P 500 logging gains of more than 1.7%. The Nasdaq Composite added 2.5%.

Blockbuster earnings from JPMorgan Chase, Goldman Sachs Group and other megabanks added to the euphoria.

The yield on 10-year Treasury notes dropped to around 4.653% from Tuesday's 4.787%. It was the largest one-day decline since November.

In recent trading, fed-fund futures showed that traders see a 16% chance that the Fed doesn't cut rates at all in 2025, according to CME Group data, down from 26% Tuesday.

The chances of more than one cut rose to about 50% from 35%.

This story is from the January 16, 2025 edition of The Wall Street Journal.

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This story is from the January 16, 2025 edition of The Wall Street Journal.

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