By Chuck Mikolajczak

NEW YORK (Reuters) -A gauge of global stocks dipped for a second straight session and U.S. Treasury yields were slightly lower in choppy trading as investors digested the latest U.S. inflation data and the path of interest rates from the Federal Reserve.

The Labor Department said the consumer price index (CPI) rose 0.2% for the fourth straight month, in-line with expectations of economists polled by Reuters. In the 12 months through October, the CPI advanced 2.6%, also matching forecasts, after climbing 2.4% in September.

Treasury yields fell after the data, but reversed course somewhat to once again put pressure on equities.

The numbers came in consistent with expectations, but under the hood there are signs of further improvement ahead,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.

The inflation risks on the horizon from possible tariffs, deficits, or immigration changes are nebulous and uncertain enough to not be a major worry until we get more details about what might happen.

The Dow Jones Industrial Average rose 10.27 points, or 0.02%, to 43,921.25, the S&P 500 fell 7.10 points, or 0.12%, to 5,976.89 and the Nasdaq Composite fell 56.20 points, or 0.29%, to 19,225.20.

MSCI’s gauge of stocks across the globe fell 3.33 points, or 0.39%, to 853.52, on track for a second straight decline after five sessions of gains. In Europe, the STOXX 600 index fell 0.58%.

Investors have flocked towards assets expected to benefit from Trump policies for his second term in office, after he pledged to impose high tariffs on imports from key trading partners, as well as lower taxes and loosen government regulations.

The S&P 500 reached a record high on Monday, partly driven by a jump in banks, which are likely to benefit from a reduced regulatory environment. Domestically focused small-cap stocks have jumped on expectations tariffs will generate less competition for their goods and lower tax rates, with the Russell 2000 vaulting to a three-year high on Monday.

But bond yields have also surged, on concerns that while Trump’s policies will spur growth, they also could rekindle inflation after a long battle to reduce price pressures following the COVID-19 pandemic. In addition, tariffs could lead to an increase in borrowing by the government, further ballooning the fiscal deficit.

The yield on benchmark U.S. 10-year notes fell 1.3 basis points (bps) to 4.418% after falling as low as 4.361% after the CPI report.

While expectations the Federal Reserve will continue cutting interest rates have been dialed back by the market over the past few weeks, they have become more volatile recently. Expectations the Fed will cut rates by 25 bps at its December meeting were at 82.5%, up from 58.7% in the prior session and just below the 84.4% a month ago, according to CME’s FedWatch Tool.

On Wednesday, Minneapolis Federal Reserve Bank President Neel Kashkari said that he is confident inflation is headed down, referencing the CPI data. Dallas Federal Reserve President Lorie Logan said the central bank should proceed cautiously on further interest rate cuts to keep from inadvertently reigniting inflation.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,rose 0.42% to 106.43, with the euro down 0.56% at $1.0564. The greenback is on track for a fourth straight session of gains after hitting 106.50, its highest since April 16.

Investors were also waiting to see if Republicans would clinch a majority in the House of Representatives and with it full control of Congress, which would give Trump power to advance his agenda.

Against the Japanese yen, the dollar strengthened 0.27% to 155.01 while Sterling weakened 0.38% to $1.2699.

The dollar strength has served to help weigh on commodities. U.S. crude fell 1.28% to $67.25 a barrel and Brent fell to $71.09 per barrel, down 1.11% on the day as the strengthening greenback and lowered demand outlook pushed oil prices near a two-week low.

(Reporting by Chuck MikolajczakEditing by Marguerita Choy)