US stocks finished solidly higher yesterday, shaking off early weakness on continued bullish sentiment as a mixed inflation report contributed to a drop in oil prices.

Major indices on Wall Street closed at their highest level since early 2022, despite initially wavering on November US Consumer Price Index (CPI) data.

The CPI report showed a slight dip in overall inflation compared with October. But core inflation – which excludes volatile food and energy components – held steady, disappointing analysts who were hoping for a more decisive report.

The report “should give the Fed some pause about cutting rates anytime soon,” said a note from Briefing.com analyst Patrick O’Hare shortly after the data was released.

“And it may very well keep the Fed vocalising the idea that it could possibly raise rates again if progress in fighting inflation stalls.”

Still, stocks gained ground as the day progressed, lifting the broad-based S&P 500 by 0.5% at the end of the day.

“The strength is feeding on itself as we get toward the end of the year,” said Tom Cahill of Ventura Wealth Management. 

“There’s some portfolio managers that are getting exposure to the market, because they fear underperforming again next year,” he said.

The US Federal Reserve wraps up its final policy meeting of 2023 on Wednesday, and although it is expected to hold interest rates steady, investors will be hoping Fed chief Jerome Powell and updated forecasts may provide more indication whether rate cuts are on the horizon early next year.

Yesterday’s report did not contain a shocking rise in inflation that might threaten the likely decision Wednesday to hold rates flat. But the report showed enough persistent inflationary pressures to delay any rate cuts, analysts said.

That dynamic was also a factor in a big drop in oil prices. After nearly 4% declines, both West Texas Intermediate and Brent oil were at their lowest levels since the end of June.

Equity markets were little changed in Europe, while the dollar pulled back against other major currencies.

Among individual companies, Oracle sank more than 12% after the software giant reported revenues that missed analyst expectations. 

Briefing.com rated the report as “lacklustre” but noted that shares of the company had risen 15% over the last six weeks, “which perhaps indicates that expectations were running ahead” of actual results.

Key figures around 2115 GMT

New York - Dow: UP 0.35% at 36,577.94 (close)

New York - S&P 500: UP 0.5% at 4,643.70 (close)

New York - Nasdaq: UP 0.7% at 14,533.40 (close)

London - FTSE 100: FLAT at 7,542.77 (close)

Paris - CAC 40: DOWN 0.1 at 7,543.55 (close)

Frankfurt - DAX: FLAT at 16,791.74 (close)

Euro Stoxx 50: 0.1% at 4,536.61 (close)

Tokyo - Nikkei 225: UP 0.2% at 32,843.70 (close) 

Hong Kong - Hang Seng Index: UP 1.1% at 16,374.50 (close)

Shanghai - Composite: UP 0.4% at 3,003.44 (close)

Dollar/yen: DOWN at ¥145.49 from ¥146.16 on Monday

Euro/dollar: UP at US$1.0800 from US$1.0765

Pound/dollar: UP at US$1.2567 from US$1.2555

Euro/pound: UP at 85.91 pence from 85.73 pence

West Texas Intermediate: DOWN 3.8% at US$68.61 per barrel 

Brent North Sea crude: DOWN 3.7% at US$73.24 per barrel – AFP, December 13, 2023.