Closing Bell: Markets Rally on Softer Inflation Data

Key Points

• Equities moved higher after CPI came in below expectations, boosting optimism for potential additional FOMC rate cuts in 2026.
• Headline CPI rose 2.7% YoY and core CPI increased 2.6% YoY, both below forecasts, driven by declines in lodging, recreation, and apparel prices.
• Nike beat revenue and EPS estimates, but shares fell ~5% after the company reported a 300-bp margin decline and warned of further margin pressure.

Markets rallied after the BLS reported a favorable CPI reading this morning, fueling hopes that the FOMC could deliver additional rate cuts in 2026. The S&P 500 (SPX) finished up 0.79%, the Nasdaq-100 (NDX) surged 1.51%, and the Russell 2000 (RUT) also closed higher. Consumer Discretionary, Communication Services, and Information Technology led the market, while Energy and Consumer Staples lagged.

CPI Comes in Softer Than Expected

The November Consumer Price Index surprised the market, with headline CPI rising 2.7% year over year—below consensus expectations of 3.1%. Core CPI also undershot forecasts, increasing 2.6% year over year versus estimates of 3.0%. Month-over-month data were not provided due to the government shutdown and the lack of October data. According to the BLS, declines in lodging away from home, recreation, and apparel were the primary contributors to the softer-than-expected inflation readings.

Nike Earnings Disappoint

Nike reported second-quarter revenue of $12.43 billion, exceeding consensus estimates of $12.2 billion, and posted adjusted earnings per share of $0.53, well above expectations of $0.38. However, the company reported a 300-basis-point decline in margins during the quarter and guided for further margin deterioration in the current period. Nike cited improving sales trends in North America but noted that tariffs are driving higher inventory costs. Shares fell roughly 5% following the report.

Key Market Events for Tomorrow

• 08:30 AM ET: FOMC Member Williams Speaks
• 10:00 AM ET: Existing Home Sales
• 10:00 AM ET: Revised University of Michigan Consumer Sentiment
• 10:00 AM ET: Revised University of Michigan Consumer Inflation Expectations

Notable Earnings for Tomorrow

• Premarket: CCL, CAG, WGO
• Postmarket: N/A

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