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US stocks rocketed on Tuesday as consumer inflation slowed more than expected.
Treasury yields plummeted as result, with the 10-year rate dropping 18 basis points.
The soft inflation report reinforced views that the Fed is done hiking rates.
US stocks leaped on Tuesday as the latest consumer price index report reinforced the possibility of an end to the Federal Reserve’s tightening cycle.
The inflation metric saw prices remain flat in October on a monthly basis versus views for a 0.1% uptick. The annual rate slowed to 3.2%, down from 3.7% in September and below views for 3.3%. Core inflation of 4% also came in below forecasts.
In response, Treasury yields were knocked lower, with the 10-year rate diving 18 basis points to 4.45%, and the 2-year yield plummeting 20 basis points to 4.84%.
“Core CPI came in below expectations with prices lower across the board. This is encouraging for markets and suggests a December hike is off the table,” said Damanick Dantes, a portfolio strategist at Global X.
Markets are reflecting this expectation. According to the CME FedWatch tool, over 99% of investors see interest rates remaining at the current 5.25%-5.50% range at next month’s FOMC meeting.
Here’s where US indexes stood at the 9:30 a.m. opening bell on Tuesday:
S&P 500: 4,475.16, up 1.44%Dow Jones Industrial Average: 34,710.04, up 1.08% (372.17 points)Nasdaq Composite: 14,018.32, up 1.82%
Here’s what else happened today:
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In commodities, bonds, and crypto:
West Texas Intermediate crude oil rose 0.33% to $78.58 a barrel. Brent crude, the international benchmark, climbed 0.53% to $82.82 a barrel. Gold inched up 0.48% to $1,956.47 per ounce. The 10-year Treasury yield dropped 18 basis points to 4.45%.Bitcoin was essentially flat at $36,542.
