LIVE MARKETS-Wall Street dips with hot inflation countering cooling oil

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WALL STREET DIPS WITH HOT INFLATION COUNTERING COOLING OIL

Wall Street's three major indexes opened lower on Tuesday as investors reacted to hotter-than-expected inflation data and braced for the prospect of more-aggressive-than-expected Federal Reserve policy tightening. However, the indexes pared losses potentially due to support from a selloff in oil futures on the day.

Odds that the Fed could raise interest rates half a percentage point at its December meeting jumped after data showed prices rising faster than expected and clearing the bar set by one key policymaker for considering a quicker pace of rate hikes.

The Consumer Price Index rose 0.4% month over month in October, and excluding volatile food and energy prices, rose 0.3% for the third month in a row, evidence of persistent "core" inflation that also showed signs of spreading through the economy. This was after Fed Governor Christopher Waller said that a core reading of 0.3% for October would prompt him to consider a half-point hike at the Fed's December 8-9 meeting.

"Inflation has been running hot. It all boils down to the same thing — the war, which is impacting oil, which is impacting energy, which is impacting basically everything else and driving everything higher. It's all based on the same thing, this asinine war. And the Federal Reserve is doing something just as stupid trying to raise interest rates to counteract a drop in supply," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

"We're so dependent on oil for our daily lives, plastic and getting food to the market and just getting food grown and, you know, shipped. Eggs don't walk to the market themselves. The farmer has to heat the hen house. He's not doing that by burning wood. So it definitely has a major impact. And whoever talked Trump into doing this war should be not only fired, but should be put on the moon."

And even though oil prices have fallen in the last week or so, Pavlik noted that it hasn't reduced the prices investors have to pay at the pump so far.

Still, investors appeared to draw some reassurance as oil prices angled for their second daily decline in a row on Tuesday after US President Donald Trump downplayed the need for additional military action against Iran, easing fears of sustained Middle East supply disruptions, with prospects of oversupply also in focus. US crude last traded close to $85 compared with its $110.48 high on October 20.

Among the S&P 500's 11 major industry sectors, two were showing small gains with materials .SPLRCM and rate-sensitive utilities .SPLRCU falling most while consumer discretionary .SPLRCD led gainers.

Here is your morning snapshot from 10:25 a.m. ET:

(Sinéad Carew)

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