Week Ahead: October Inflation Report Tests Wall Street's Bets on a December Rate Hike

After a week that delivered both a record rally and a brutal sell-off, Wall Street turns to inflation.

The Labor Department releases the October consumer price index on Tuesday. After Friday's strong jobs report, fed fund futures pointed to roughly an 80% chance the Federal Reserve raises rates at its Dec. 8-9 meeting, Reuters reported ^[1].

The Fed held steady in October after raising rates in September for the first time in three years. Investors expect about two more quarter-point increases in total this cycle ^[1].

The stakes are high for a jittery market. The Nasdaq ended Thursday nearly 12% below its Oct. 6 record, in correction territory, on fears that Democratic wins would slow the AI data-center build-out ^[1]. One State Street strategist called it "a fragile momentum trade" ^[1].

Earnings from CoreWeave, Applied Materials and Cisco Systems will also test the AI story ^[1].

The bottom line: a hot inflation number would make a December hike close to certain. A cool one could give stocks room to breathe.