Stocks rally as traders lock in bets on lower rates
November’s reading of the consumer-price index matched Wall Street’s expectations, helping spark a stock-market rally.
The SPDR S&P 500 Trust and Invesco QQQ Trust are on the rise in the premarket, with the iShares Russell 2000 ETF outperforming and gaining almost 1% following this release.
The lack of any upside surprise in inflation was enough to fortify bets that the Federal Reserve will deliver another rate cut at next Wednesday’s meeting. The implied odds of a 25-basis point reduction in its policy rate rose from 86% to over 99% after the data on Tuesday.
Small caps tend to have more floating-rate debt than their larger peers, and so benefit disproportionately from rate cuts.
