Stocks jumped on Tuesday after an encouraging report on U.S. inflation brought relief to Wall Street. According to the report, inflation slowed last month from September, as did a key underlying figure that economists see as a better indicator of future trends. This news has bolstered bets on Wall Street that the Federal Reserve may finally be done with its market-crunching hikes to interest rates. The optimistic outlook for Wall Street was reflected in a widespread rally, with more than 90% of the stocks in the S&P 500 climbing. Consequently, technology and other high-growth stocks experienced significant boosts from easier rates, with Amazon’s stock increasing by 2.5% and Nvidia’s stock rising by 2.1%.
The highly anticipated report was seen as encouraging news for Wall Street as the data has buoyed hopes that the Fed may successfully slow the economy and investment prices just enough to grind down inflation without causing a painful recession. Still, there are no certainties with the ongoing situation. After raising its main interest rate to its highest level since 2001, thought the Fed may keep its main rate high for a time and it unlikely to hike rates further. Moreover, the inflation report caused Treasury yields in the bond market to tumble while the value of the U.S. dollar fell against many other currencies.
After the report, some industry leaders spoke up. Chief Economist Gregory Daco said that it is unlikely the last mile will be the most difficult due to a variety of disinflationary factors. Head of multi-sector fixed income investing at Goldman Sachs Asset Management, Lindsay Rosner said that the report should solidify the Federal Reserve’s decision for the rate increase to be on hold in December, which is a different perspective in comparison to the day before. Consequently, traders now see a zero chance of an increase at the Fed’s next meeting on Dec. 13, down from a 14.5% probability just a day ago, according to data from CME Group. The prospect of no more rate hikes reverberated across all kinds of financial markets.
