Inflation data ahead, Fed decision looms large – what’s moving markets

Investing.com — Investors await the publication of the U.S. inflation report for November, which will likely factor into how Federal Reserve officials approach a major forthcoming interest rate decision. Elsewhere, “Fortnite”-maker Epic Games wins a closely-watched antitrust lawsuit brought against Google over the tech giant’s Play app store.

1. Key U.S. inflation data ahead

Federal Reserve policymakers will have the chance to parse through key inflation data for November prior to unveiling their latest interest rate decision later this week.

Economists expect the annual to come in at 3.1% last month, decelerating slightly from 3.2% in October. Month-on-month, the is seen holding steady, in line with the October mark of 0.0%.

So-called “” consumer prices, which strip out volatile items like food and energy, are projected to have risen by 4.0% annually, matching the prior month. On a monthly basis, are estimated at 0.3%, a faster pace than 0.2% in October.

The numbers could provide a glimpse into the impact of the Fed’s long-standing bout of interest rate hikes on price growth in the world’s largest economy. Although many market observers are predicting that the central bank will soon begin to bring down borrowing costs, Fed Chair Jerome Powell has stressed that officials will continue to move “carefully” as they search for proof that a recent period of elevated inflation has been quelled.

2. Fed meeting to begin

The Fed is set to kick off its final two-day policy meeting of the year on Tuesday, with most observers all but certain that officials will choose to leave interest rates unchanged at a more than 22-year high of 5.25% to 5.50%.

Comments from Powell, particularly any regarding the Fed’s plans for possible rate cuts in 2024, will likely take up much of the spotlight.

Powell, who has overseen an era of historically rapid policy tightening during his almost six-year tenure at the world’s most influential central bank, faces the tough task of attempting to give the Fed the flexibility to adjust rates as necessary to cool inflation down to its 2% target.

“There is growing evidence that tight monetary policy and restrictive credit conditions are having the desired effect on depressing inflation,” analysts at ING said in a note. “However, the Fed will not want to endorse the market pricing of significant rate cuts until they are confident price pressures are quashed.”

Along with Powell’s statements, investors will also be able to pour through the quarterly “dot plot,” an outline of where Fed members see the appropriate path of monetary policy heading in the future. Markets are currently placing an almost 50% probability on a rate reduction in May next year, according to the CME FedWatch Tool. 

3. Futures steady

U.S. stock futures inched slightly higher on Tuesday, as investors geared up for the upcoming release of the consumer price data and the start of the Fed meeting.

By 05:00 ET (10:00 GMT), the contract had gained 82 points or 0.2%, had edged up by 6 points or 0.1%, and had climbed by 28 points or 0.2%.

The main averages on Wall Street ended in the green on Monday, extending a recent winning streak into a third consecutive day. The benchmark , 30-stock , and tech-heavy all posted their best close so far this year, buoying hopes for a potential end-of-year rally.

4. Epic prevails in Google antitrust lawsuit

A federal jury in San Francisco has found against Google in a high-profile antitrust lawsuit brought against the tech giant by “Fortnite”-maker Epic Games.

Epic had argued that Google essentially used its Play app store as an illegal monopoly that unfairly charged high fees on developers and suppressed competition in the Android app market. According to a court filing, the jury ruled in favor of Epic on all counts after a more than month-long trial.

The court will begin to decide what changes Google will need to put in place in January.

In a statement quoted by Reuters, Google said it would appeal the decision, adding that it will “continue to defend the Android business model and remain deeply committed to our users, partners, and the broader Android ecosystem.”

Epic Chief Executive Tim Sweeney, meanwhile, declared “victory over Google” in a post on social media platform X.

5. Oil inches higher

Oil prices edged up on Tuesday after an attack on a commercial chemical tanker by Iran-aligned Houthis exacerbated worries over violence in the Middle East.

By 04:56 ET, expiring in February had gained 0.3% to $76.28 a barrel, while had added 0.4% to $71.85 per barrel.

Gains were limited, however, as traders took some caution prior to the release of the all-important U.S. inflation report and the Fed’s upcoming rate decision.

Signs of sticky U.S. inflation in the upcoming data may persuade policymakers to keep borrowing costs higher for longer — a trend that could eat into demand in the world biggest fuel consumer.

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