Wall Street surges after data show inflation cooling in US; S&P up 3.4%.
NEW YORK — Stocks are bursting toward their best day in years Thursday as exhilaration sweeps Wall Street and financial markets worldwide after a report showed The S&P 500 was 4.1% higher in morning trading, and the encouraging data also sent prices leaping in markets for everything from metals to European stocks. Even bitcoin clawed back some of its steep plunge from prior days caused by the The Dow Jones Industrial Average was up 837 points, or 2.6%, at 33,351, as of 10:16 a.m.
All the action stemmed from a U.S. government report showing that inflation slowed to 7.7% last month from 8.2% in September. It’s the fourth straight month of moderation since inflation hit a peak of 9.1% in June, and it was an even better reading than the 8% that economists were expecting. Slower inflation could keep the Fed off the most aggressive path in raising interest rates. It’s already raised its key lending rate to a range of 3.75% to 4%, up from close to zero in March.
Big Tech stocks were some of the most buoyant forces on Wall Street following the inflation report. Apple and Microsoft both leaped more than 6%, while Amazon soared 10%. Slower inflation could get the Federal Reserve to downshift the size of its rate hikes at its next policy meeting in December, after it pushed through four straight mega increases of 0.75 percentage points. That could be a precursor for the Fed eventually getting back to the more typical sized increase of 0.25 percentage points.
“The Fed was adamant that it won’t hit the brakes on rate hikes until inflation slows, and while the market’s rally indicates investors may see light at the end of the tunnel, it will get one more reading before its decision next month,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. “Remember that even as we see a slowdown, prices remain elevated and have a long way to go before normalizing.
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