- US headline: Core CPI growth rate lower than expected
- Investors increasingly believe the Fed is done raising interest rates
- Home Depot’s profits rise above expectations
- Index gains: Dow 1.44%, S&P 1.83%, Nasdaq 2.05%
Nov 14 (Reuters) – U.S. stock indexes rallied on Tuesday as weaker-than-expected inflation data raised hopes that the Federal Reserve could finish raising interest rates and begin cutting them next year. did.
The benchmark S&P 500 index (.SPX) briefly exceeded the 4,500 mark for the first time in two months, and the tech-heavy Nasdaq index (. IXIC) was trading at a two-month high. Gasoline prices also fell in October.
The CPI rose 3.2% in the 12 months to October, following a 3.7% rise in September, but economists polled by Reuters had expected a 3.3% rise from a year earlier.
Core prices, which exclude volatile food and energy factors, rose 4.0%, compared with the 4.1% rise expected by economists.
Thomas Hayes, chairman of hedge fund Great Hill Capital, said: “I’m pleased that both headline CPI and core CPI were lower than expected.”This means the Fed is done and there’s nothing left to do here.” “This shows that we have not done so.” yoke.
“This is what the Fed was looking for: something that would slow inflation, slow the labor market, and at the same time hold up the economy.”
The data prompted traders to dismiss expectations that the Fed would raise borrowing costs any further and begin betting on interest rate cuts by May. According to CME Group’s FedWatch tool, they are currently pricing in a 100% chance that the Fed will keep interest rates on hold next month.
U.S. Treasury yields fell, with the two-year bond yield, which best reflects short-term interest rate expectations, falling to its lowest level in two weeks.
This led to big growth stocks such as Nvidia (NVDA.O), Alphabet (GOOGL.O), Amazon.com (AMZN.O), and Tesla (TSLA.O) rising 1.6% to 4.7%. .
The small-cap Russell 2000 index (.RUT) rose 4.7%, hitting its highest point in more than six weeks. Rate-sensitive sectors such as real estate (.SPLRCR) and utilities (.SPLRCU), which have been hit hard this year, rose 5.5% and 3.4%, respectively.
Wall Street’s major indexes rallied strongly in November on expectations that U.S. interest rates are near their peak, even though Fed Chairman Jerome Powell last week left the door open for further tightening.
Negotiations over a funding bill by U.S. lawmakers are also in focus, with a weekend deadline for funding the federal government.
U.S. House Speaker Mike Johnson said Tuesday he thought the House would pass a short-term spending bill to avoid a partial government shutdown starting Saturday.
As of 12 p.m. ET, the Dow Jones Industrial Average (.DJI) was up 494.67 points, or 1.44%, at 34,832.54, and the S&P 500 Index (.SPX) was up 80.73 points, or 1.83%, at 4,492.28. , the Nasdaq rose 494.67 points (1.44%) to 34,832.54. The Composite Stock Price Index (.IXIC) rose 282.21 points (2.05%) to 14,049.95.
Following news that Amazon.com (AMZN.O) will allow U.S. Snapchat users to purchase some products listed on the e-commerce company directly from the social media app, Snap Inc. SNAP.N)’s stock price rose 7.7%.
Home Depot (HD.N) rose 6.6% after the U.S. home improvement chain beat quarterly profit expectations.
Fisker (FSR.N) fell 22.5% after the electric vehicle startup cut its 2023 production forecast.
Advancing issues outnumbered declining issues by a ratio of 11.13 to 1 on the New York Stock Exchange and 3.93 to 1 on the Nasdaq.
The S&P index recorded 41 new 52-week highs and no new lows, while the Nasdaq recorded 93 new highs and 101 new lows.
Reporting by Sruthi Shankar and Amruta Khandekar in Bengaluru. Additional reporting by Ankika Biswas.Editing: Shinjini Ganguly
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