Stock Market Update

[BRIEFING.COM] The stock market trades at or near highs after a mixed start to the session. The major indices were little changed from Tuesday's closing levels in the early going, but there has been a positive bias under the index surface through the entire session. 

The index improvement coincided with some mega cap stocks recovering initial losses. Apple (AAPL 226.50, +2.27, +1.0%) had been down as much as 0.7% and Microsoft (MSFT 428.64, +5.60, +1.3%) had been down as much as 1.1% before moving into positive territory.

This price action occurred alongside rising market rates, which moved lower earlier in response to this morning's release of the October Consumer Price Index.

Total CPI was up 2.6% year-over-year, versus 2.4% in September, and core CPI up 3.3% year-over-year, unchanged from September, stoking worries about inflation persisting above the Fed's 2.0% target. The 10-yr yield, which is most sensitive to changes in inflation expectations moved as low as 4.36% in response to the print, but sits at 4.44% now, which is one basis point higher than Tuesday's settlement. 

Buyers continue to favor areas of the market that are viewed as benefitting from the incoming administration. Bank stocks are a standout in that respect. The SPDR S&P Bank ETF (KBE) sports a 1.2% gain today, bringing its post-election gain to 12.5%. The SPDR S&P Regional Banking ETF (KRE) trades 1.6% higher today, bringing its post-election gain to 14.3%.

The S&P 500 financial sector is among the top performers today, up 0.6% from yesterday. The sector is 7.1% higher than last Tuesday's close in front of the election results.

Reviewing today's economic data:

• Weekly MBA Mortgage Applications Index 0.5% ; Prior -10.8%
• October CPI 0.2% (Briefing.com consensus 0.2%); Prior 0.2%, October Core CPI 0.3% (Briefing.com consensus 0.3%); Prior 0.3%
  • The key takeaway from the report -- and perhaps calming influence -- is the understanding that the shelter index accounted for more than 65% of the total 12-month increase in core CPI, so the market is watering down the headline inflation print as not being as comprehensively inflationary as it seems. The unadjusted change in the all items less shelter index was just 1.3% year-over-year.