“It’s a good sign for the Fed … everything is moving in the direction the Fed wants,” said Robert Pavlik, a senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “Taking into account only this data, it would allow the Fed to raise rates only 50 basis points instead of 75 at the next meeting.”
The data prompted traders to adjust their rate hike forecasts, with bets on a 50 basis point hike in December jumping to more than 70% from 45% before the CPI release.
On the other hand, a report was also published that indicated that the number of Americans who filed new applications for unemployment benefits increased moderately last week.
By midday, the Dow Jones Industrial Average was up 2.5% at 33,335 points, the S&P 500 was up 4% at 3,900.8. For its part, the Nasdaq Composite, made up mainly of technology companies, shot up 5.68% to 10,940.7 units.
Tech stocks are more sensitive to rate hikes, so hopes that inflation will start to ease and rate hikes will stop drive their stocks, such as Tesla, Microsoft, Apple, Amazon.com, Meta Platforms and Nvidia advanced between 5% and 7%.
The CBOE Volatility Index, also known as the Wall Street Fear Gauge, fell to a nearly two-month low of 2,375.
Republicans, meanwhile, moved closer to securing a majority in the US House of Representatives while control of the Senate hinged on some tight races, two days after Democrats averted an anticipated “red wave” of Republican gains in the midterm elections.