Stock Market Update

The stock market is on track for a higher opening, with the S&P 500 futures trading 60 points above fair value.

Total CPI for the two-month period from September to November was up 0.2% (Briefing.com consensus: 0.3%), while core CPI, which excludes food and energy, was also up 0.2% for the two-month period (Briefing.com consensus: 0.3%). The October data were not available due to the government shutdown.

On a year-over-year basis, total CPI increased 2.7% versus a prior 3.0%, and core CPI was up 2.6% versus a prior 3.0%.

The key takeaway from the report is twofold: first, it is a messy report because of the lack of October data, but secondly and more to the point today, the disinflation in the year-over-year readings is a welcome sight for policymakers and market participants.

Initial jobless claims for the week ending December 13 decreased by 13,000 to 224,000 (Briefing.com consensus: 229,000). Continuing jobless claims for the week ending December 6 increased by 67,000 to 1.897 million.

The key takeaway from the report is its low firing-low hiring dynamic, evidenced by the decrease in initial claims and the increase in continuing claims. That is a delicate balance that helps validate the Fed's willingness to walk the line with a rate cut at its December meeting, particularly when paired with the disinflation seen in the November CPI report.

Separately, the Philadelphia Fed Index dropped to -10.2 in December (Briefing.com consensus: 2.9) from -1.7 in November. The headline reading, though, was also accompanied by a welcome 13-point drop in the prices paid index to 43.6, which is the lowest reading since June.