Wall Street rally builds momentum, Dow rallies 500 points: Live updates

Oil price rose more than 1% as inflation cooled in the U.S. month over month and the International Energy Agency raised its crude demand forecast.

Brent crude contracts for January rose $1.06, or 1.28%, to $83.58 a barrel, while West Texas Intermediate contracts for December increased $1.02, or 1.30%, to $79.28 a barrel.

Consumer prices in the U.S. were flat in October from the previous month, strengthening the case that the Federal Reserve is done raising interest rates. Higher rates can slow economic activity and hit crude demand.

The IEA also raised its 2023 crude demand forecast to 2.4 million barrels per day from 2.3 million barrels. The agency increased its 2024 forecast to 930,000 barrels per day from 880,000 previously.

— Spencer Kimball

Markets have almost completely taken off the table any chance that the Federal Reserve will raise interest rates again this cycle.

Following Tuesday morning’s inflation report indicating that prices were broadly unchanged in October from the previous month, traders in the futures market were assigning just a 5% probability to a hike at the central bank’s December or January meetings, according to the CME Group’s FedWatch gauge of futures pricing.

The probability for a December hike was around 14% and 25% for January prior to the consumer price index release.

Instead, futures pricing now points to the Fed’s next move as a cut, coming as soon as the May meeting.

—Jeff Cox

The U.S. dollar index fell 1% on Tuesday after the latest consumer price index came in weaker than expected.

The dollar index, which measures the currency against a basket of six others, hit a low of 104.54 in morning trading.

— Michelle Fox

Stocks opened higher on Tuesday after October consumer price index came in flat, lower than analysts expected.

The Dow Jones Industrial Average added 357 points, or 1%. The S&P 500 gained 1.3%, while the Nasdaq Composite ticked up 1.9%.

— Lisa Kailai Han

October’s consumer price index, a key inflation gauge for the Federal Reserve, came in lower than analysts expected.

Inflation was flat from the previous month, versus the 0.1% increase expected by economics surveyed by Dow Jones. The CPI increased 3.2% from a year ago, lower than the 3.3% consensus.

Stock futures rallied on the news.

— Lisa Kailai Han

The CBOE Volatility Index — or VIX, a popular gauge of market volatility — is back to normal levels after spiking above 20 last month, its long-run average since 1990, according to DataTrek Research.

The VIX tends to have an inverse relationship with the equity market. This proved true last month when the VIX closed at 21.3 on October 27, the same day the S&P 500 posted near-term lows and closed at 4,117.

But with the gauge back down to bull market territory, or trading at a level around 15, DataTrek co-founder Nicholas Colas is optimistic what this means for stocks ahead.

“Markets are confident that rates will stabilize/decline and stocks will continue to rally,” he wrote. “We agree.”

— Lisa Kailai Han

Oil was largely flat on Tuesday after the International Energy Agency forecast higher demand for crude.

The Brent crude contract for January fell 17 cents to $82.35 a barrel, while the West Texas Intermediate contract for December fell 10 cents to $78.16 per barrel.

Oil futures traded largely flat despite the IEA raising its 2023 demand forecast to 2.4 million barrels per day from 2.3 million barrels. The agency also raised its 2024 forecast to 930,000 barrels per day from 880,000 previously.

Crude sold off last week on worries that demand will fall in the China and the United States as the global economy is expected to slow. But the Organization of Petroleum Exporting Countries said the market is strong, blaming speculators for the selloff.

— Spencer Kimball

Home Depot reported third-quarter earnings and revenue that beat expectations. However, the home improvement retailer issued tepid guidance, keeping shares in check.

“A customer who might have remodeled their entire home may be opting for a partial remodel,” CFO Richard McPhail told CNBC. “Maybe they won’t redo their entire kitchen. Maybe they’ll just do the countertop and backsplash. And so it’s really just the downscaling of projects that we’ve seen.”

— Fred Imbert

European markets were mixed on Tuesday, with investors looking ahead to preliminary third quarter gross domestic product data from the euro zone, along with October’s U.S. inflation print.

The pan-European Stoxx 600 index was roughly flat in early trade. Basic resources added 0.9% while financial services stocks dropped 0.5%.

Asian markets have had a tumultuous year.

The MSCI Asia ex Japan Index plunged from its January high, losing around 12% since then.

Chinese stocks are especially volatile. Hong Kong’s Hang Seng index is down around 12% in the year to date, while the Shenzhen Component has fallen over 9%.

Those keen on investing in Asia in the face of such uncertainty can consider Morgan Stanley’s selection of Asian stocks it calls “alpha” opportunities for November.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Rising commodity prices, increased regulation and a growing recognition of sustainability benefits are set to be “key catalysts” of the circular economy, Goldman Sachs said, naming its “conviction list” stocks to play the theme.

Quoting estimates from McKinsey, Accenture and the United Nations Environment Program, the bank said that the economic benefits of the circular economy range from $2.9 trillion to $4.5 trillion by 2030.

“While regulators, corporates, and investors have placed much emphasis on achieving Net Zero emissions and Biodiversity goals, we believe the critical role a Circular Economy will play in solving for both has been overlooked, particularly as a lack of available resources threatens the speed, scale, and affordability of a clean energy transition,” Goldman’s analysts wrote in a Nov. 2 note.

CNBC Pro subscribers can read more here.

— Amala Balakrishner

Australia’s consumer confidence slid in November, according to a Westpac-Melbourne Institute survey.

The Westpac-Melbourne Institute index of consumer sentiment fell to 79.9 in November, down from 82 in October. The current reading reflects deeply pessimistic levels, according to the survey.

It notes that the Reserve Bank of Australia’s decision to raise interest rates by 25 basis points to 4.35% last week, knocked about 6 points off confidence during the survey week.

“The RBA’s November rate hike has put renewed pressure on family finances and reignited concerns about both the rising cost of living and the prospect of further rate rises to come,” said Matthew Hassan, senior economist of Westpac Group.

“Responses over the survey week show sentiment was heading for a slight gain prior to the RBA move, responses amongst those surveyed before the decision consistent with an index read of just over 83.”

The RBA had held interest rates steady four straight months until its meeting in November.

— Shreyashi Sanyal

Moody’s Investors Service lowered its outlook late Monday to negative from stable on a slate of banking subsidiaries, including those of JPMorgan and Wells Fargo.

The move comes after the ratings agency cut its outlook on the U.S. government Friday.

In particular, the ratings agency affirmed the Aa1 long-term deposit ratings for certain bank subsidiaries and branches of Bank of America, JPMorgan Chase & Co. and Wells Fargo. However, Moody’s updated its outlook on these ratings to negative from stable.

The ratings agency pointed to “the potentially weaker capacity of the Government of the United States of America (Aaa negative) to support the US’s systemically important banks, as reflected in the recent change in the outlook on the Government of the United States of America to negative from stable.”

–Darla Mercado

Tuesday’s consumer inflation report will likely show some “strong to quite strong” data for October, according to Andrew Patterson, senior economist at Vanguard.

“Near-term risks are skewed to the upside for this month and could come from goods inflation deflating at a slower than expected pace as the fall in used car prices stalls, and from healthcare insurance and [owners’ equivalent rent] coming in higher than expected,” he said.

Looking at the components of core inflation, Patterson sees shelter inflation slowing below 0.4% month over month for October, but there is an elevated risk of a higher-than-expected print on owners’ equivalent rent.

He noted that supply pressures have normalized to pre-pandemic levels, which means there’s limited downside to prices on goods. “In our view, slowing consumer demand will be crucial for future deceleration in the component,” Patterson said.

The CPI report is due at 8:30 a.m. on Tuesday.

— Darla Mercado

Don’t expect any let up in the price of chocolate at the holidays after the price of December cocoa bean contracts climbed to a record $4,073 per metric tonne (2,205 pounds) on Monday.

As recently as June, cocoa contracts were trading for less than $3,200 per metric tonne.

Cocoa is more than 56% higher in 2023, but that’s not necessarily good news for the companies who use it as a raw ingredient in their products. Hershey is lower by 16% in 2023, Nestle‘s sponsored ADRs are off 5% while Mondelez is higher by just 4%.

— Scott Schnipper, Gina Francolla

A handful of science-oriented stocks made notable moves in extended trading.

Azenta climbed more than 4% after delivering a strong financial report for the fiscal fourth quarter. The life science stock beat the consensus forecasts of analysts polled by FactSet and offered guidance for the full year that was in line with expectations.

Viking Therapeutics also added more than 4%. Viking shared new data from the second phase of a trial for patients with patients with non-alcoholic steatohepatitis, known in short as NASH.

— Alex Harring

Markets will be watching Tuesday for the first of two key inflation reports that the Labor Department will release this week.

The consumer price index for October is expected to show that prices increased just 0.1% for the month, after rising 0.4% in September, according to a Dow Jones consensus estimate. On a year-over-year basis, the CPI is expected to increase 3.3%, after being up 3.7% the previous month.

Excluding food and energy, core CPI is projected to rise 0.3% and 4.1% respectively, after showing the same levels in September.

The release, due at 8:30 a.m. ET, precedes Wednesday’s producer price index, which reflects prices at the wholesale level.

—Jeff Cox

Stock futures were little changed shortly after 6 p.m. ET Monday.

Futures tied to the Dow, S&P 500 and Nasdaq 100 all sat near flat. It followed a relatively muted trading day on Monday as investors readied for the inflation report coming Tuesday.

— Alex Harring