Consumer prices fell 0.4% between May and June, marking the largest monthly decline in four years, the Labor Department reported Tuesday. On an annual basis, inflation slowed to 3.5%, down from 4.2% in May and below the expectations of many economists.

The report offers evidence that price pressures have moderated despite recent volatility in energy markets, potentially giving the Federal Reserve additional flexibility as policymakers weigh whether further interest rate increases will be necessary.

Core inflation, which excludes the often-volatile food and energy categories and is closely monitored by the Federal Reserve, was unchanged during June. Annual core inflation eased to 2.6% from 2.9% a month earlier, although it remains above the Fed’s long-term 2% target.

Michael Metcalfe, head of macro strategy at State Street Markets, said the latest figures suggest recent increases in gasoline prices have not yet spread broadly across the economy.

“This reading is very much in the camp that the inflation we’ve had this year is transitory,” Metcalfe said. “Yes, gas prices went up, but nothing else did, more or less.”

Federal Reserve outlook

The softer inflation report could lessen pressure on the Federal Reserve to raise its benchmark interest rate in the near term. Fed officials left the central bank’s key policy rate unchanged at about 3.6% during their most recent meeting.

Kathy Bostjancic, chief economist at Nationwide Financial, said the data provides policymakers with greater flexibility.

“Today’s report gave some breathing room for the Federal Reserve in deciding whether and when to raise interest rates,” she said.

Federal Reserve Chair Kevin Warsh, in prepared testimony to the House Financial Services Committee on Tuesday, reiterated that the central bank has “no tolerance” for elevated inflation and pledged that high inflation would become “a thing of the past.” He did not indicate what policy actions the Fed may take in coming months.

Minutes from the Fed’s June 16-17 meeting showed policymakers remain divided over whether additional rate increases will be needed this year. Roughly half favored another increase if inflation remains persistent, while others preferred waiting for further evidence that price growth continues to moderate.

Broad-based easing across consumer prices

Several major categories recorded slower price increases than economists had anticipated.

Electricity prices declined 1% from May to June, although they remained 4% higher than a year earlier. Clothing prices fell 0.6% during the month but were still up 3.9% compared with June last year.

Grocery prices increased 0.2% in June and were 2.7% higher than a year earlier. Apartment rental costs also continued to moderate, rising just 0.1% over the month and 2.8% annually.

The latest figures indicate that inflation has cooled across a wider range of goods and services rather than being driven solely by lower fuel prices.

Energy markets remain a key uncertainty

Despite the encouraging inflation report, developments in global energy markets continue to pose risks.

Oil prices rose for a second consecutive day Tuesday after the United States renewed attacks on Iran and President Donald Trump announced a new blockade in the Strait of Hormuz, a strategic shipping route that handles roughly one-fifth of global oil supplies.

Brent crude, the international oil benchmark, climbed 4.6% to $87.13 per barrel after both the United States and Iran said the Strait of Hormuz remained under their control.

Gasoline prices have also increased by roughly six cents per gallon over the past week, reaching a nationwide average of $3.86 per gallon.

Bostjancic cautioned that future inflation trends could depend heavily on geopolitical developments.

“Today’s number is a very good reading, but so much is going to depend on what happens in the Middle East,” she said.

Inflation outlook remains mixed

Federal Reserve officials have also identified growing investment in artificial intelligence infrastructure as a potential source of future inflation, particularly through rising demand for semiconductors and electricity. Higher chip costs have already prompted companies including Apple, Microsoft and Dell to announce price increases for some consumer electronics.

Fed Governor Christopher Waller said Monday he remains concerned about underlying inflation, noting that the Fed’s preferred measure of core inflation had risen from 3% in December to 3.4% in May.

“If we get another hot reading on core inflation this week, then the (Fed) will need to consider tightening monetary policy in the near term,” Waller said during a speech in New York.

By contrast, John Williams, president of the Federal Reserve Bank of New York, said last week that if monthly core inflation remains near 0.2% for the rest of the year, the central bank could avoid additional rate increases. June’s inflation report broadly aligns with that outlook.

Other indicators continue to send mixed signals. The Federal Reserve Bank of New York reported last week that nearly half of businesses in its regional survey that have paid tariffs still expect to raise prices further.

Separately, Walmart announced price reductions on thousands of products, including groceries, clothing, toys and household items. President Donald Trump praised the retailer’s decision on social media, although the company did not attribute the price cuts to government policy.

Reporting Credit: This report is based on reporting by The Associated Press.

Article Topics:U.S. Inflation | Federal Reserve | Consumer Prices | Interest Rates | Gas Prices | Economy | Monetary Policy | Labor Department

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Published Time: 08-15-2025, 16:00

As the Federal Reserve prepares for its annual Jackson Hole conference next week and a crucial September policy meeting, officials remain divided on the most pressing challenge for the U.S. economy: persistent inflation or slowing job growth.

The Fed’s upcoming decisions will be closely watched by investors and economists, as signals from policymakers will influence borrowing costs, financial markets, and the broader economy.

Weaker Job Gains Fuel Debate Over Rate Cuts

Recent labor data have complicated the Fed’s path forward. Weak job growth since April has prompted some officials to support a potential cut in the central bank’s key interest rate as soon as September. However, other members continue to view inflation as a significant concern that may warrant maintaining current rates.

“The slowdown in aggregate demand and soft labor market indicators suggest we should focus on employment risks,” said Michelle Bowman, a member of the Fed’s Board of Governors. Bowman emphasized that underlying inflation is trending toward the Fed’s 2% target, allowing some flexibility to prioritize job creation.

July’s monthly jobs report highlighted the challenge: average monthly job gains for May, June, and July fell to 35,000—a sharp drop from 123,000 a year ago—raising concerns about economic momentum.

Inflation Remains a Core Concern

Despite weaker hiring, many Fed officials caution that inflation is not fully contained. Austan Goolsbee, president of the Federal Reserve Bank of Chicago, noted that while job growth has slowed, the unemployment rate remains low at 4.2%, signaling a resilient labor market.

“The job slowdown may partly reflect reduced immigration rather than a weakening economy,” Goolsbee told reporters. He also pointed to rising prices in services such as dental care and air travel, which are not directly affected by tariffs, as a warning sign that inflation could remain elevated.

Tariffs and the Uncertain Inflation Outlook

Federal Reserve officials continue to debate the impact of tariffs on future inflation. Mary Daly, president of the Fed’s San Francisco branch, suggested that recent trade duties may cause a temporary price increase but are unlikely to trigger long-term inflation pressures.

Conversely, Raphael Bostic, president of the Fed’s Atlanta branch, warned that tariffs could create structural changes if manufacturers shift production from low-cost overseas locations to higher-cost domestic facilities or other countries with higher wages. “This is more than a one-time effect—it fundamentally changes the economy,” Bostic said. He added that with low unemployment, the Fed has the luxury to wait for clearer data before acting.

Market Expectations and Policy Uncertainty

Wall Street investors currently anticipate a rate cut in September, with CME FedWatch futures indicating a 93% probability. This optimism increased after August 1’s jobs report revealed weaker hiring than initially estimated.

However, recent wholesale price data may temper expectations for aggressive cuts. The July wholesale price report showed significant price increases for goods and services before reaching consumers, making a larger half-point reduction in September less likely. Alberto Musalem, president of the Fed’s St. Louis branch, described such a move as “unsupported by the current state of the economy and the outlook.”

Economists also caution that the Fed’s inflation projections may need adjustment. Tim Duy of SGH Macro noted that inflation, excluding volatile food and energy prices, is forecast to reach 3.1% by year-end—already near current levels—making a rate cut more challenging if policymakers anticipate continued price pressures.

Jerome Powell’s Speech Will Be Closely Watched

With uncertainty surrounding both jobs and inflation data, all eyes are on Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole conference. Observers expect Powell’s remarks to provide critical insight into the Fed’s thinking ahead of the September 16-17 meeting.

“If inflation risks materialize or tariffs begin to affect prices more persistently, the Fed may have to reconsider a rate reduction,” Duy said. “There are factors that could push policymakers off the expected path.”

Balancing Dual Mandates

The Federal Reserve is navigating a delicate balance between its dual mandates: promoting maximum employment and stabilizing prices. Some officials prioritize supporting the labor market amid signs of slowing hiring, while others remain cautious to avoid reigniting inflation pressures that could undermine long-term economic stability.

As the Fed approaches its September meeting, investors, policymakers, and businesses will be analyzing each new jobs and inflation report for clues on the central bank’s next move. How the Fed weighs these competing concerns will have significant implications for the U.S. economy and financial markets in the coming months.

Source: AP News – Inflation or jobs: Federal Reserve officials are divided over competing concerns

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Stocks edge higher after Powell’s wait-and-see message, as tensions ease in the Middle East

Asian markets posted modest gains Wednesday, following Wall Street’s rally and signs of easing geopolitical tensions in the Middle East. Investors are now shifting their focus to the Federal Reserve and the potential impact of tariffs and oil prices on the global economy.

In testimony to Congress on Tuesday, Federal Reserve Chair Jerome Powell signaled that the Fed is in no rush to cut interest rates — a stance that contrasts sharply with former President Donald Trump’s calls for immediate action.

“For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance,” Powell said before the House Financial Services Committee.

Oil Prices Bounce Back, but Remain Below Pre-Conflict Levels

Oil prices rebounded slightly early Wednesday after tumbling roughly 6% on Tuesday. The drop followed a fragile but holding ceasefire between Israel and Iran, easing fears that the conflict might disrupt global oil supplies.

• U.S. crude rose 1.2% to $65.16 a barrel
• Brent crude added 1.1%, reaching $66.95

Despite the slight uptick, oil remains cheaper than it was before the conflict erupted nearly two weeks ago — good news for consumers and central bankers trying to rein in inflation.

“Easing stress in energy markets is excellent news for everyone who doesn’t want to see higher oil prices translating into accelerating inflation and tighter monetary policy,” said Ipek Ozkardeskaya of Swissquote Bank.

Asian Markets Follow Wall Street’s Lead

Investor confidence seems to be rebounding. After Trump announced the Israel-Iran ceasefire, global markets rallied. On Tuesday, the S&P 500 surged 1.1%, climbing back within 0.8% of its record high from February. The Dow Jones jumped 1.2%, and the Nasdaq added 1.4%.

That momentum carried over to Asian trading early Wednesday:

• Japan’s Nikkei 225: +0.3% to 38,917.08
• Hong Kong’s Hang Seng: +0.9% to 24,386.59
• Shanghai Composite: +0.5% to 3,437.10
• South Korea’s Kospi: +0.2% to 3,110.19
• Australia’s S&P/ASX 200: +0.1% to 8,562.90
• Taiwan’s Taiex: +1.1%
• India’s Sensex: +0.7%
• Thailand’s SET: -0.4%

“The world can now move on to face other difficult choices like tariffs and things like that,” said Frances Lun, CEO of GEO Securities in Hong Kong. “The market is well on its way to rebound and could again reach new levels.”

Fed Remains Cautious Amid Tariff Uncertainty

While the ceasefire and falling oil prices are calming markets, the Federal Reserve is keeping a close eye on another wildcard: tariffs.

The Fed has made it clear that it’s not ready to act until it sees more data on how the recently imposed tariffs — part of Trump’s broader economic strategy — will impact inflation and growth. Tuesday’s consumer confidence report came in weaker than expected, though inflation remains only slightly above the Fed’s 2% target.

Currency Markets

In currency trading:

• The U.S. dollar rose to 145.10 Japanese yen from 144.93 yen
• The euro edged up slightly to $1.1617 from $1.1610

Source: AP News – Asian shares gain as investors shift focus to Federal Reserve, tariffs

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Inflation in the Eurozone has dipped to 2.4% in February, offering fresh support for a potential interest rate cut by the European Central Bank (ECB). While the reduction signals progress in the fight against inflation, questions remain over how far the ECB will go in lowering borrowing costs, especially given Europe’s sluggish growth.

Key Figures and Trends

According to Eurostat, the annual inflation rate in the 20 countries using the euro currency dropped slightly from 2.5% in January to 2.4% in February. This decline was largely driven by falling energy prices. Notably, France saw a remarkably low inflation rate of just 0.9%, which further highlights the region’s cooling inflationary pressures.

The February figure strengthens the argument that the ECB is succeeding in its primary goal of bringing inflation closer to its 2% target. With inflation on a downward trajectory, the central bank is now shifting focus to supporting the eurozone’s tepid growth, which has been a growing concern.

ECB Rate Cut Expected

Market analysts are widely expecting the ECB to lower its benchmark interest rate by 0.25 percentage points to 2.5% at its upcoming meeting on Thursday. This would be a move to stimulate borrowing and spending in a fragile economy. A rate cut typically lowers borrowing costs, making it easier for businesses to expand and individuals to secure loans for home purchases.

While a rate reduction was already anticipated, the recent inflation data has strengthened the case for it.

Economic Growth Challenges

Growth in the eurozone has been weak, with the economy stagnating in the final quarter of 2024. Consumer caution, still lingering from the inflation surge, and business concerns over potential tariffs on exports to the U.S. under President Donald Trump have dampened spending. Additionally, political instability in key countries—such as France’s lack of a parliamentary majority to tackle a growing budget deficit, and the political transition in Germany after its February election—has added to the uncertainty.

Recent data from S&P Global’s purchasing managers’ surveys indicated that the eurozone economy barely grew in February, highlighting ongoing struggles.

The Big Question: How Far Will the ECB Go?

Thursday’s meeting will likely focus on whether ECB President Christine Lagarde will provide guidance on the future path of interest rates. While inflation has significantly decreased from its peak of 10.6% in October 2022, some price pressures persist. Service costs—covering everything from haircuts and hotel stays to medical care—remain elevated, holding steady at 3.7%.

In its January meeting, the ECB maintained that its high benchmark rate was still restrictive for growth. If that language is omitted in Thursday’s meeting, it could signal that the ECB might be approaching the limit of its rate-cutting cycle.

Changing Economic Landscape

Recent comments from Isabel Schnabel, a key member of the ECB’s executive board, suggest that the bank may not be able to continue cutting rates aggressively. Schnabel noted that the “neutral rate”—the point at which monetary policy neither stimulates nor restrains the economy—has likely risen in recent years, making it harder for the ECB to pursue deep rate cuts.

Schnabel’s remarks indicate that risks to inflation are shifting. While inflation may be under control for now, the dynamics of the global economy may prevent the ECB from further easing in the near future.

Conclusion

As the ECB prepares for its meeting on Thursday, the latest inflation data presents a mixed picture. While inflation is moderating, growth concerns persist, and the ECB faces the challenge of balancing rate cuts with the broader economic outlook. The coming months will reveal how far the ECB is willing to go in supporting Europe’s economy while ensuring inflation stays under control.

Source

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Key Takeaways:

• The Federal Reserve reduced interest rates by 25 basis points but projected fewer rate cuts in 2025 than previously anticipated.
• U.S. markets faced a sharp sell-off, with major indices experiencing significant losses.
• Investor disappointment stemmed from dashed expectations of aggressive rate reductions in the near future.

Fed’s Decision: A Modest Cut but a Tighter Future

On Wednesday, the U.S. Federal Reserve lowered its interest rate by 25 basis points, setting its target range to 4.25%-4.5%. While this marked a step toward easing monetary policy, the central bank’s updated projections signaled only two rate cuts for 2025—a notable downgrade from the four cuts anticipated in September.

This revised outlook delivered a blow to markets that had hoped for a more aggressive easing trajectory.

Market Reaction: A Sell-Off Frenzy

U.S. markets tumbled in response to the Fed’s announcement:

• Dow Jones Industrial Average: Dropped over 1,000 points (-2.58%), marking its 10th consecutive day of losses.
• S&P 500: Declined 2.95%.
• Nasdaq Composite: Fell 3.56%.

Across the Atlantic, the Stoxx 600 in Europe closed up 0.15% before the Fed’s decision, escaping the U.S. market’s turbulence.

Individual Stock Movements: Tesla and Micron Hit Hard

• Tesla: Shares plummeted 8.3%, their steepest one-day drop since November 2016, as analysts flagged the stock’s disconnect from fundamentals amid broader market weakness.
• Micron: The chipmaker’s stock plunged more than 15% in extended trading. While it exceeded last quarter’s earnings expectations, Micron issued a disappointing revenue forecast of $7.9 billion for the current quarter, well below analysts’ estimates of $8.98 billion.

Why Investors Were Disappointed

The markets’ reaction wasn’t about the Fed’s actual rate cut—it was about the revised dot plot.

Before the Fed meeting, markets widely expected the 25 basis-point reduction, with futures pricing in a 98% probability of the move. Investors had even hoped for another rate cut as soon as January, with an 81.6% chance forecasted.

However, Fed Chair Jerome Powell quashed those expectations.
“With today’s action, we have lowered our policy rate by a full percentage point from its peak, and our policy stance is now significantly less restrictive,” Powell said.
“We can therefore be more cautious as we consider further adjustments to our policy rate.”

Following Powell’s comments and the updated projections, the chance of another January rate cut plummeted to just 6.4%.

The Emotional Blow: A Shift in Market Sentiment

This shift in expectations felt like a harsh reality check for investors. The optimism that drove recent market performance crumbled as hopes of aggressive rate cuts gave way to the Fed’s cautious tone.

David Russell, global head of market strategy at TradeStation, summed up the sentiment:
“Good-bye punch bowl. No Christmas cheer from the Fed.”

Bottom Line: The Power of Expectations

Wednesday’s sell-off is a reminder of how markets often move not on present actions, but on expectations for the future. The Fed’s decision to moderate its easing plans, coupled with Powell’s cautious messaging, recalibrated investor sentiment—leading to the dramatic market retreat.

For now, markets will closely watch every word and signal from the Fed, as the balance between cautious optimism and economic reality continues to shape financial markets.

Source

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Weaker Yuan Could Counteract US Tariffs

China’s central bank is exploring measures to allow the yuan to weaken as trade tensions with the United States intensify. Policymakers are weighing a potential depreciation of the yuan to 7.5 per dollar to offset the economic shocks posed by increased US tariffs, according to sources familiar with the discussions.

Letting the yuan depreciate could make Chinese exports more competitive by lowering their dollar-denominated costs. This strategy may also create room for looser monetary policies to stimulate the domestic economy. The move comes as China braces for heightened trade risks following Donald Trump’s inauguration as US president next month. Trump has pledged to impose a universal 10% tariff on imports and a 60% tariff specifically targeting Chinese goods.

High-Level Discussions on Yuan Policy

China’s top financial policymakers, including the People’s Bank of China (PBOC), have been debating how to manage the yuan’s value while addressing trade pressures. Officials have traditionally maintained a tightly controlled foreign exchange rate, allowing the yuan to fluctuate within a 2% range of the central bank’s daily midpoint.

However, sources suggest that next year may see a shift toward a more flexible exchange rate policy. This approach would empower market forces to play a greater role in determining the yuan’s value. The PBOC and the State Council Information Office, which handles government media inquiries, have yet to comment on these discussions.

Policy Shift Signals Economic Adaptation

A recent meeting of the Communist Party’s Politburo signaled a departure from long-standing policy norms. For the first time in 14 years, the government announced plans to adopt an “appropriately loose” monetary policy for the coming year. Notably, the statement omitted any commitment to maintaining a “basically stable yuan,” a term previously emphasized in official communications.

Yuan Could Drop to 7.5 per Dollar

According to a report by the China Finance 40 Forum Research Institute, analysts recommend temporarily shifting the yuan’s anchor from the US dollar to a basket of non-dollar currencies, such as the euro, to enhance flexibility during this period of trade turbulence. This proposal aligns with internal discussions suggesting the yuan could drop to 7.5 per dollar, representing a 3.5% depreciation from its current level of around 7.25.

This level of depreciation could benefit China’s economy by boosting export earnings, reducing deflationary pressures, and helping achieve its challenging 5% economic growth target for next year. The yuan’s value has already declined by nearly 4% against the dollar since September as investors prepare for a more aggressive US trade stance under Trump.

Historical Precedent and Economic Implications

During Trump’s previous term, the yuan weakened by over 12% against the dollar between March 2018 and May 2020 amid escalating trade tensions. A weaker yuan could once again act as a buffer, alleviating the impact of tariffs and supporting China’s export-driven economy.

While some analysts predict the yuan may fall to 7.37 per dollar by the end of next year, the PBOC has a track record of managing volatility through state-backed interventions in currency markets. This approach ensures stability while allowing for strategic adjustments to address external economic pressures.

Balancing Risks and Opportunities

As China navigates the challenges of US trade policies, a more flexible yuan policy could provide a critical tool for economic resilience. However, this strategy carries risks, including potential capital outflows and increased costs for imported goods. Policymakers will need to carefully balance these factors to protect China’s economic stability while responding to external trade pressures.

Source

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Key Points:

• Investment banks forecast the Chinese yuan to weaken to an average of 7.51 per dollar by the end of 2025.
• This would mark its lowest level on record, based on data since 2004.
• Chinese authorities face a tough balancing act: stabilizing the yuan while reviving the economy.

The Chinese yuan is under increasing pressure as global investment banks predict the currency will hit record lows due to looming tariff threats from U.S. President-elect Donald Trump.

Weakening Yuan Projections

According to calculations by CNBC, major financial institutions estimate the offshore yuan will average 7.51 per dollar through 2025, signaling the weakest value since record-keeping began in 2004.

Currency Projections by End-2024 and End-2025 (Selected Banks):

Trump announced on Monday via his social media platform Truth Social that he plans to impose an additional 10% tariff on all Chinese imports. This is on top of his campaign promise to implement tariffs of 60% or more.

Economic Impact of Tariffs

Analysts warn that new tariffs would strengthen the U.S. dollar, forcing significant currency adjustments in countries with strong trade ties to the U.S., including China.

Jonas Goltermann, deputy chief markets economist at Capital Economics, explained, “U.S. tariffs would, all else being equal, lead to an appreciation of the dollar.”

Mitul Kotecha, Barclays’ head of FX & EM macro strategy for Asia, projected the yuan could devalue to 8.42 against the dollar to fully account for 60% tariffs.

Recent Yuan Performance

The offshore yuan has already depreciated by more than 2% since the U.S. presidential election on November 5, trading at 7.2514 as of Thursday. The heightened uncertainty around this tariff threat is greater than during Trump’s first term, given its scope and the scale of the trade imbalance.

China’s Response

To counter the yuan’s slide, the People’s Bank of China (PBOC) has held major policy rates steady, aiming to maintain currency stability. Last week, a central bank official emphasized the goal of keeping the exchange rate “basically stable at an adaptive and balanced level.”

Wei Liang Chang, global FX strategist at DBS Bank, expressed optimism, stating that stabilizing measures could manage depreciation expectations and bolster broader Asian currencies. He added, “A recovery is on the cards when U.S. rates soften further.”

U.S. Policy and Market Reaction

The U.S. dollar index has eased slightly after Trump nominated hedge fund manager Scott Bessent as the next Treasury Secretary. Bessent, who supports tariffs, has advocated for a phased approach, which analysts believe could mitigate trade risks and limit excessive capital outflows from China.

Looking Ahead

As China grapples with economic recovery and currency stabilization, the U.S. tariff threat adds significant challenges to the global trade environment. The yuan’s trajectory remains uncertain, hinging on policy decisions and ongoing U.S.-China negotiations.

Source

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NEW YORK (AP) — U.S. stocks ended with mixed results on Wednesday as a recent inflation report raised expectations of an interest rate cut by the Federal Reserve next month.

The S&P 500 was nearly flat, inching up less than 0.1%, following its first decline since last week’s post-Election Day rally. Meanwhile, the Dow Jones Industrial Average gained 47 points, or 0.1%, and the Nasdaq composite slipped by 0.3%.

Bond Market Reaction and Rate-Cut Expectations

The bond market also showed mixed results. Consumer inflation increased from 2.4% to 2.6%, as economists expected. However, “core inflation” (which excludes volatile categories like food and energy) remained steady, an indicator of long-term trends that economists say is more predictive. This stability strengthened expectations for a December rate cut.

“Bang in-line core inflation leaves the Fed on track to cut rates in December,” said Lindsay Rosner, head of multi-sector fixed income at Goldman Sachs Asset Management.

Since September, the Federal Reserve has gradually reduced interest rates from a two-decade high to support the job market and bring inflation near its 2% target. After the last rate cut in October, traders now see an 80% chance of a third cut in December, according to CME Group data.

Following the inflation report, the yield on the two-year Treasury fell to 4.27% from 4.34% on Tuesday. The 10-year Treasury yield, influenced by long-term growth expectations, initially dropped but eventually rose slightly to 4.45%.

Uncertainty for 2025 and Potential Economic Changes

Looking forward, questions remain regarding the Fed’s plans for 2025. Previous Fed forecasts indicated potential further rate cuts into next year, but Donald Trump’s recent election victory may change that trajectory. Trump’s support for lower taxes, higher tariffs, and reduced regulation could lead to increased government debt, higher inflation, and accelerated economic growth, potentially altering rate cut plans.

“While lower rates can boost the economy and stock prices, they can also fuel inflation,” noted Scott Wren, senior global market strategist at Wells Fargo Investment Institute. “The market may be at an inflection point, with inflation potentially turning upward.”

Stock Highlights

On Wall Street, Rivian Automotive surged 13.7% after it shared more details about its joint venture with Volkswagen Group, which could reach a total size of $5.8 billion, exceeding prior estimates.

In contrast, Spirit Airlines stock fell 59.3% after the company filed for debt renegotiation, which, if successful, could affect shareholder equity but protect employees and customers.

By the end of trading, the S&P 500 rose 1.39 points to close at 5,985.38. The Dow gained 47.21 points, reaching 43,958.19, while the Nasdaq declined by 50.66 points to finish at 19,230.74.

Global Markets and Cryptocurrency Movements

Internationally, Japan’s Nikkei 225 dropped 1.7% following a surge in wholesale inflation to its highest level since July 2022. South Korea’s Kospi fell 2.6%, affected by a significant decline in Samsung Electronics shares.

In the cryptocurrency space, Bitcoin crossed above $93,000 before pulling back below $90,000. President Trump has embraced cryptocurrencies, pledging to make the U.S. the global crypto capital. Meanwhile, Dogecoin (favored by Tesla’s Elon Musk) also pared earlier gains after Trump appointed Musk to head the “Department of Government Efficiency,” or “DOGE” for short.

Source

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