Could CPI drive the market's next move? 12/02/2025

HOT stories for today

US market wrap:
 

• Stock performance remains uneven as major indices fluctuate within their recent boundaries. With neither buyers nor sellers finding a definitive catalyst to seize market dominance, company-specific earnings and announcements are dictating movements, with investors scouting for prospects and traders capitalizing on the turbulence. Caution was prevalent on Tuesday after Federal Reserve Chair Jerome Powell informed the Senate Banking Committee that policymakers were in no rush to implement additional interest rate reductions.
• This marked the first of his two scheduled testimonies on Capitol Hill this week, coinciding with a period in which President Donald Trump has been actively imposing tariffs on U.S. trade partners. These ongoing trade frictions have kept markets restrained, with the S&P 500 closing Tuesday nearly unchanged, while the Nasdaq Composite declined by approximately 0.4%. The Dow, however, outperformed, gaining around 0.3%.Tesla tumbled 6% following BYD’s collaboration with DeepSeek, while Musk added to DOGE-related distractions with his bid for OpenAI.

Could CPI drive the market's next move?
 

• January’s Consumer Price Index (CPI) is expected to show a 0.3% monthly increase, with annual inflation holding at 2.9%. Core inflation, excluding food and energy, is projected at 3.1%, slightly below December’s 3.2%. While disinflationary trends persist in some sectors, tariffs imposed by President Donald Trump could counteract those effects. The report is unlikely to bring major surprises, but investors will scrutinize details for signs of easing inflation that could justify Federal Reserve rate cuts. Bank of America remains skeptical, predicting the Fed will hold rates steady throughout 2025 as inflation remains above target and the labor market stays strong. In contrast, market forecasts suggest a potential rate cut in July.
• Price pressures are expected from rising vehicle costs, auto insurance, and communication services, while airfare and rent trends could offer some relief. Despite mixed inflation signals, the Fed is expected to maintain its cautious stance. Chair Jerome Powell reiterated there’s no rush to cut rates, and Cleveland Fed President Beth Hammack warned that tariffs may further complicate inflation control. For now, all eyes remain on inflation trends as the market awaits the Fed’s next move.

 
Stocks on the move:       

• DoorDash (DASH): The food delivery stock gained nearly 6% after reporting stronger-than-expected fourth-quarter revenue. DoorDash posted $2.87 billion in revenue, exceeding the $2.84 billion forecast by analysts surveyed by LSEG.
• Super Micro Computer (SMCI): Shares of the server manufacturer rose more than 4% despite lowering its fiscal 2025 revenue outlook. The company now expects annual revenue between $23.5 billion and $25 billion, while analysts projected $24.92 billion. Super Micro also stated it aims to file its delayed annual report by February 25.
• Lyft (LYFT): The ride-hailing company saw its stock drop over 9% after missing revenue estimates. Lyft reported $1.55 billion in fourth-quarter revenue, slightly below the $1.56 billion expected by analysts polled by LSEG.
• Upstart Holdings (UPST): The AI-powered lending platform surged 25% after issuing an optimistic first-quarter forecast. Upstart anticipates $200 million in revenue for the current quarter, surpassing analysts’ expectations of $193.8 million.
• Zillow (ZG): The real estate marketplace stock declined 5% after a fourth-quarter earnings miss. Zillow reported adjusted earnings of 27 cents per share, just shy of the 28 cents per share estimate from analysts surveyed by LSEG.

 
Today’s action

• Asia-Pacific markets showed a mixed performance on Wednesday as investors assessed the impact of U.S. President Donald Trump’s tariffs on regional economies. Meanwhile, U.S. Federal Reserve Chair Jerome Powell reiterated on Tuesday the central bank’s commitment to controlling inflation, emphasizing that policymakers were in no hurry to cut interest rates. Japan’s Nikkei 225 climbed 0.4% after reopening post-holiday, while the Topix remained unchanged. South Korea’s Kospi advanced 0.3%, whereas the small-cap Kosdaq declined 0.66%. In Hong Kong, the Hang Seng Index gained 1.79%, while mainland China’s CSI 300 fluctuated and ended flat.
• In the U.S., S&P 500 futures hovered near unchanged levels early Wednesday as traders awaited the latest consumer inflation data. Futures linked to the broad market index dipped 0.1%, while Dow Jones Industrial Average futures fell by 34 points. Nasdaq 100 futures slipped 0.08%. Later in the day, investors will closely monitor Powell’s testimony before the House Committee on Financial Services, along with fresh earnings reports from CVS Health, Robinhood, Cisco Systems, and MGM Resorts.

Wahtclist: TSLA, ZG, UPST, SMCI, LYFT, DASH, GILD, CVS

Bitcoin

• Bitcoin remains within a broader consolidation phase despite recent selling pressure, with a decisive move above $98,500 potentially shifting momentum in favor of buyers. If trading volume picks up and bitcoin reclaims key moving averages, a rally toward $100,000 and beyond remains within reach.
• A softer U.S. inflation report on Wednesday could provide a boost for risk assets, including bitcoin (BTC), though those anticipating a sharp bullish breakout may need to temper expectations. Meanwhile, Federal Reserve Chair Jerome Powell, during a Senate hearing, reaffirmed his commitment to addressing concerns over "debanking" in legal business sectors, including digital assets. He also acknowledged that crypto stablecoins "may have a significant future" and expressed support for ongoing regulatory efforts.
  Watchlist: Bitcoin: 89 000-108 000, Ethereum: 2200-3000, Solana: 180-276

Forex

• The Japanese Yen (JPY) continues to weaken for the third consecutive session on Wednesday as concerns mount over the economic impact of U.S. President Donald Trump’s tariffs on commodity imports and potential retaliatory measures. A positive risk sentiment further weighs on the safe-haven currency, while renewed demand for the U.S. Dollar (USD) supports the USD/JPY pair, keeping it firmly above the mid-153.00s ahead of the European session. However, rising expectations of another Bank of Japan (BoJ) rate hike in March could help curb further JPY depreciation.
• EUR/USD remains stable around 1.0360 during Asian trading hours on Wednesday after gains in the prior session. However, the proposed tariff initiative, which could also target non-tariff barriers such as subsidies, taxes, and regulations, may lead to higher U.S. duties on imports from Japan, the EU, and China, potentially weighing on the euro.
  Watchlist: EUR/USD: 1.0200-1.0550, USD/JPY: 153.6-158.80

Basic Materials

• West Texas Intermediate (WTI) crude rises to a two-week high near $72.95 in early Asian trading Wednesday, driven by Middle East tensions and supply concerns. U.S. sanctions on Russia and pressure on Iranian exports tighten supply, supporting prices. Geopolitical risks add to the rally, with Israeli Prime Minister Netanyahu warning of a Gaza ceasefire collapse if Hamas fails to release hostages by Saturday. However, rising U.S. crude inventories may limit gains. The American Petroleum Institute (API) reported a 9.043 million-barrel increase last week, far exceeding the previous 5.025 million-barrel rise.
• Gold (XAU/USD) declines for the second consecutive day on Wednesday, trading near $2,885, down 0.45%. The drop comes as a modest uptick in the US Dollar (USD) pressures the non-yielding metal. Federal Reserve Chair Jerome Powell’s hawkish remarks on Tuesday bolstered USD demand, weighing on gold. Additionally, a positive risk sentiment and slightly overbought conditions on the daily chart add to the selling pressure. However, concerns over a potential trade war could help limit further downside for the safe-haven asset.
  Watchlist: GOLD 2600-2902, US Oil: 70.00-79.00

Key Economic Events Today:

EST time
08:30 am: USD CPI, Core CPI
10:00 am: USD Fed Chair Powell Testifies
10:30 am: USD Crude Oil Inventories
12:00 pm: USD FOMC Member Bostic Speaks 

Earnings

BMO (Before the US Market opens)
CME       CME Group Inc
CVS       Health Corp.
VRT       Vertiv Holdings
D            Dominion Energy
AMC (After the US Market closes): CSCO, APP, TTD, HOOD

The TEFS Analyst team wishes you a successful day!