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Today the Bureau of Labor Statistics reported that headline CPI inflation in November climbed at a 7.1% annual rate. Month-to-month inflation rose by just 0.1% from October. Core inflation, that is inflation without energy or food prices, rose at a 6.0% annual rate with a 0.2% increase in November from October.

Both the headline and core inflation numbers were better than economists had projected before this morning’s data release. Economists surveyed by Bloomberg had projected that headline Cpi inflation would climb by a 7.3% annual rate and 0.3% month over month. Core inflation was projected to move higher by 0.3%.

The news certainly shows inflation on the decline. And that was good news for stocks ahead of tomorrow’s meeting of the Federal Reserve’s interest rate-setting body the Open Market Committee.

For the day the Standard & Poor’s 500 finished higher by 0.73% and the NASDAQ Composite gained 1.01%.

Both indexes had been higher in the day with the S&P 500 up 1.57% at 11 a.m. and the NASDAQ Composite ahead 2.20%.

In my opinion, investors pulled back as the session moved to the close on uncertainty over what the Fed would do and say tomorrow. In all likelihood the consensus is correct and the Fed will raise rates by 50 basis points tomorrow, which would keep the narrative alive of the Fed moving toward a pause in interest rate increases in early 2023.

The danger, however, is that the Fed’s Dot Plot projections, the first update since September, would show the central bank thinking about a higher peak to interest rates than bullish investors would like. Or that Fed chair Jerome Powell would say something that opened up that possibility.

It’s only prudent to take a bit of today’s gains off the table on this uncertainty about tomorrow.