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Closing Summary - Gains build in front of FOMC decision

The major indices ended the session near their highs of the day. The S&P 500 and Dow Jones Industrial Average each logged a 0.5% gain and the Nasdaq Composite registered a 0.7% gain. Stocks started the session with more muted price action, though, as investors initially reacted to the November Consumer Price Index.

The report was largely in-line with expectations, but market participants got hung up for a bit on the sticky nature of core CPI, which was up 4.0% year-over-year, unchanged from October, and services inflation less rent of shelter, which was up 0.6% month-over-month and up 3.5% year-over-year.

Notably, rate hike expectations did not move much in response to the data. The probability of a 25 basis points rate cut in May stands at 75.8%, versus 74.9% yesterday, according to the CME FedWatch Tool.

Relative strength in the mega cap space offered some support to index performance, but many other stock participated in today's gains. The Vanguard Mega Cap Growth ETF (MGK) registered at 0.8% gain and the Invesco S&P 500 Equal Weight ETF (RSP) logged a 0.2% gain.

Ongoing buying activity in this seasonally strong period for the market was supported by early resilience to selling efforts, along with a fear of missing out on further gains.

Three of the 11 S&P 500 sectors traded down today, but the energy sector (-1.4%) saw the largest decline by a wide margin amid falling energy prices. WTI crude oil futures dropped 3.8% to $68.62/bbl and natural gas futures declined 5.3% to $2.33/mmbtu. That price action was a positive development as it relates to inflation and inflation expectations despite leading to losses in the energy sector today.

The information technology (+0.8%) and financial (+0.7%) sectors led the outperformers.

After some whipsaw action in response to the CPI data, the Treasury market was relatively calm today in front of Wednesday's FOMC meeting, which will include a new policy directive, an updated Summary of Economic Projections, and Fed Chair Powell's press conference. The 2-yr note yield rose one basis points to 4.74% and the 10-yr note yield fell four basis points to 4.20%.

Separately, Oracle (ORCL 100.81, -14.32, -12.4%) was a standout loser today following its mixed fiscal Q2 earnings report and in-line fiscal Q3 guidance.

Nasdaq Composite: +38.9%

S&P 500: +21.0%

Dow Jones industrial Average: +10.4%

S&P Midcap 400: +8.7%

Russell 2000: +6.8%

Reviewing today's economic data:

• November NFIB Small Business Optimism 90.6; Prior 90.7
• November CPI 0.1% (Briefing.com consensus 0.0%); Prior 0.0%; November Core CPI 0.3% (Briefing.com consensus 0.3%); Prior 0.2%T
• The key takeaway from the report is the recognition that core CPI was "sticky," largely because the shelter index (+0.4%) continues to be sticky. That should continue to give the Fed some pause about cutting rates anytime soon; and it may very well keep the Fed vocalizing the idea that it could possibly raise rates again if progress in fighting inflation stalls.

Wednesday's calendar features:

• 07:00 ET: MBA Mortgage Applications Index (Prior 2.8%)
• 08:30 ET: November PPI (Briefing.com consensus 0.1%; prior -0.5%) and Core PPI (Briefing.com consensus 0.2%; prior 0.0%)
• 14:00 ET: FOMC policy directive and Summary of Economic Projections
• 14:30 ET: Fed Chair Powell's press conference to discuss FOMC decision

Overseas:

• Europe: DAX -0.0%, FTSE -0.0%, CAC -0.1%
• Asia: Nikkei +0.1%, Hang Seng +1.3%, Shanghai +0.4%

Commodities: