Category: Financial Markets

The Markets boomed on Thursday with the S&P 500 and NASDAQ racking up their biggest daily percentage gains in over 2-1/2 years after a better-than-expected inflation read in October sparked speculation the Federal Reserve might become less aggressive with interest rate hikes. Note though, not a pivot a slowing! More than 90% of stocks in the benchmark were in the green.

As a result, stocks in sectors across the board surged as the latest consumer price data cheered investors worried that ongoing interest rate hikes could hobble the U.S. economy.

“This is a big deal,” said King Lip, chief strategist at Baker Avenue Asset Management in San Francisco. “We have been calling the peak of inflation for the last couple of months and just have been incredibly frustrated that it hasn’t shown up in the data. For the first time, it has actually shown up in the data.”

This crimped Treasury yields and sparking a sea of the green in tech stocks amid hopes for the Federal Reserve to lean less hawkish on rate hikes and lower interest rates translating to better earnings returns later.

In the end, The Dow Jones Industrial Average gained 3.7%, the NASDAQ was up 7.4%, and the S&P 500 gained 5.5%. The Dow has now recovered about 17% from its closing low on Sept. 30, and it remains down about 9% from its record high close in early January.

The Labor Department reported that the consumer price index was up 7.7% from a year earlier, the smallest annual advance since the start of the year and down from 8.2% in September. Core prices, which exclude food and energy and are regarded as a better underlying indicator of inflation, advanced 6.3%, pulling back from a 40-year high. In fact, year-over-year, core CPI jumped 6.3%, along with several other months this year, the worst since 1982.

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