wall street enjoyed its best day in more than two years on Thursday as markets rejoiced at a government report that showed inflation in USA it got colder last month than anticipated.
The S&P 500 soared 5.5%, while the Dow Jones Industrial Average gained nearly 1,200 points and the Nasdaq Composite posted what could be a full year’s gain in one day by adding 7.4%.
Every sector from food to metals to European equities posted gains after traders interpreted the data as a sign the worst of inflation may be behind us, though analysts warned it was still too early. to sing victory.
Even bitcoin recovered some of its huge losses in recent days caused by the latest crisis of confidence in the cryptocurrency industry.
Some of the most dramatic moves were in the bond market, where Treasury yields slumped after investors bet on how aggressive the Federal Reserve will be in raising interest rates to control inflation. These increases have been the main reason for the problems of wall street this year and threaten to cause a recession.
The yield on the 10-year Treasury bond, which helps set mortgage rates and other loans, fell to 3.82% from 4.15%. It’s a dramatic move for the bond market, with the yield poised for its biggest single-session decline since 2009, according to Tradeweb.
All that action stemmed from a US government report that showed year-on-year inflation slowed in October for the fourth month in a row since peaking at 9.1% in June. The 7.7% reading beat analysts’ forecasts, who had expected 8%.
Perhaps more importantly, inflation also slowed more than expected after excluding the effects of food and energy prices. That is the extent to which fed pay more attention to it. Inflation in October compared to September also fell.
“The month-to-month rate of inflation is much more informative,” said Brian Jacobsen, investment strategist at Allspring Global Investments. “In that parameter, inflation is still high, but not terrifyingly high.”
Stocks of big tech companies were some of the biggest gainers in wall street after the report on inflation. Apple rose 8.9%, Microsoft increased 8.2% and Amazon soared 12.2%.
The S&P 500 rose 207.80 points to close at 3,956.37. The Dow added 1,201.43 points, or 3.7%, to 33,715.37, while the Nasdaq soared 760.97 points to 11,114.15.
Lower inflation could lead to fed to reduce the size of the increases in its interest rates during its next meeting in December, after four consecutive increases of three-quarters of a percentage point. That could open the door for the Central Bank to resume the more usual increases of 0.25% before suspending them completely.
Although Thursday’s report on inflation was encouraging, analysts warned that the campaign of the fed to combat inflation is far from over. This is not the first time that inflation data has been encouraging, only to accelerate again.
