Market Volatility Drops Sharply Ahead Of Fed's Rate Decision

US stocks closed higher on Tuesday, after the recent data showed the smallest annual rise in inflation in around one year.

The consumer price index rose 0.1% in November following a 0.4% increase in the previous month, according to the Labor Department. Economists, however, were expecting for a 0.3% increase in prices.

The US dollar also dropped over 1% against a basket of major peers on Tuesday following the release of inflation data.

The Federal Reserve is expected to announce a rate hike of 50 basis points at the end of today’s meeting.

Shares of Moderna, Inc (NASDAQ:MRNA) jumped around 20% on Tuesday after announcing that its Merck & Co, Inc MRK partnered cancer vaccine met the primary efficacy endpoint.

Majority of the sectors on the S&P 500 closed on a positive note, with energy and real estate stocks recording the biggest surge on Tuesday. However, consumer staples stocks traded lower during the session.

The Nasdaq 100 jumped 1.09% to close at 11,834.20 on Tuesday, amid gains in shares of Apple Inc (NASDAQ: AAPL) and Amazon.com, Inc. AMZN. The S&P 500 gained 0.73%, while the Dow Jones added 0.30% to 34,108.64 in the previous session.

The Chicago Board Options Exchange's CBOE Volatility Index (VIX) dipped 9.8% to 22.55 points on Tuesday.

What is CBOE Volatility Index?

The CBOE Volatility Index, popularly known as VIX, is a measure of the equity market's expectation of volatility based on S&P 500 index call and put options.