Market Notes - December 16, 2009

U.S. stock index futures maintained gains after government reports showed inflation and housing starts matched economists’ expectations in November.

The consumer price report for November was calming on most financial markets despite the rise in the headline number. Both the headline and core numbers were much less inflationary than yesterday’s PPI numbers. The Labor Department said its Consumer Price Index rose 0.4% on a seasonally adjusted basis after a revised 0.3% gain in October, led higher by energy and medical care costs. The core index, which excludes energy and food, was unexpectedly unchanged. The consensus called for a 0.1% rise.

Separately, builders broke ground on more homes in November as housing starts rose to an 8.9% annual rate of 574,000. Housing starts looked good for November, but should be seen in the context of October’s weak reading. The two months together indicate that housing is in a slow recovery.

The Fed will release its final policy statement of the year when it concludes its two-day meeting. They are widely expected to hold the fed funds rate, a key overnight bank lending rate, unchanged at historic lows near 0%. However, the policy statement, due at 2:15 pm ET, will be dissected for hints as to when rates could rise.