Wrap: Mega-Cap Stocks Lead Market Gains Amid CPI-Driven Optimism

The stock market rallied today, driven by gains in mega-cap stocks and a broadly favorable reaction to the November Consumer Price Index (CPI) report. The S&P 500 rose 0.8 percent, while the Nasdaq Composite outperformed with a 1.8 percent gain, closing above 20,000 for the first time. The Dow Jones Industrial Average lagged, dipping 0.2 percent. Positive market breadth underscored a widespread advance, though the impact of mega-cap performance was particularly pronounced in lifting the broader indices.

Standout mega-cap stocks included Tesla, Alphabet, Amazon, and Meta Platforms, all of which reached record highs. Tesla led the charge with a 5.9 percent jump, reflecting strong investor enthusiasm across the sector.

The November CPI report met market expectations, reinforcing confidence in a Federal Reserve rate cut at the upcoming Federal Open Market Committee (FOMC) meeting. Total CPI rose to 2.7 percent year-over-year from 2.6 percent, while core CPI remained at 3.3 percent. Though inflation remains above the Fed’s 2 percent target, the market viewed the report as a sign of moderating pressures, with the shelter index showing the smallest increases for rent and owners’ equivalent rent in over two years. These trends suggest that shelter costs could continue to temper future inflation readings.

The probability of a 25-basis-point rate cut at next week’s FOMC meeting climbed to 94.9 percent, up from 88.9 percent yesterday, according to the CME FedWatch tool. Treasury yields initially declined after the CPI release but recovered slightly by the session’s close. The 2-year yield ended at 4.16 percent, and the 10-year yield settled at 4.27 percent.

Earnings reports spurred significant individual stock moves. GameStop surged 7.6 percent, and Stitch Fix soared 44.4 percent after delivering strong quarterly results. Conversely, Dave & Buster’s plummeted 20.1 percent following disappointing earnings and guidance. Macy’s also dipped 0.8 percent amid weak consumer sentiment in the retail sector.

In corporate news, General Motors traded 1.3 percent lower after announcing the discontinuation of funding for its Cruise robotaxi development, while GE Vernova gained 5 percent following an upgrade to its fiscal 2025 revenue guidance.

On the economic front, the Treasury Budget deficit widened to $366.8 billion in November, compared to $314.0 billion a year ago. The increase was driven by higher outlays, including a significant rise in net interest expenses, which surpassed national defense spending.

Commodities experienced notable movement as crude oil rose 1.89 percent to $70.35 per barrel, while gold surged 1.4 percent to $2756.60 per ounce. Natural gas also gained ground, climbing to $3.38 per mmBtu.

Looking ahead, market participants will focus on tomorrow’s November Producer Price Index (PPI) data, weekly jobless claims, and natural gas inventory figures. These data points will provide further insights into inflation trends and economic conditions as the market anticipates the Fed’s policy decision next week.

With the year-to-date performance of major indices reflecting robust gains—Nasdaq Composite up 33.5 percent, S&P 500 up 27.6 percent—investors remain optimistic about the Fed’s pivot toward a more accommodative monetary stance, even as economic challenges persist. The interplay of earnings results, macroeconomic data, and Federal Reserve policy will continue to shape market sentiment in the days ahead.