Stocks Edge Higher as Rate Cut Bets Gather Steam

The Dow and the S&P 500 rose following October's consumer price data, boosting confidence in a December Fed rate cut. While some Fed officials advised caution, the CPI's alignment with forecasts fueled speculation. Meanwhile, market reactions also reflected election results and company-specific news.

The Dow and the S&P 500 made modest gains on Wednesday, buoyed by October's consumer price data showing inflation in line with expectations. The consumer price index increased by 0.2% last month and 2.6% year-on-year, bolstering predictions of a U.S. Federal Reserve interest rate cut in December.

Fed officials offered mixed signals, with Minneapolis Fed President Neel Kashkari expressing confidence in falling inflation. The probability of a rate cut has surged to over 82%, according to CME's FedWatch. However, other Fed leaders, including Dallas Fed President Lorie Logan, urge caution to avoid reigniting inflation.

Despite inflation concerns, market optimism was evident following election projections of a Republican congressional win. Yet, experts like Barclays' Venu Krishna caution that today's economic environment presents greater risks than in 2016. Elsewhere, Spirit Airlines faced nosediving shares over bankruptcy rumors while Rivian profited from Volkswagen's investment boost.

(With inputs from agencies.)