NEW YORK: Wall Street stocks jumped on Tuesday (Dec 13) as consumer inflation data came in better than expected, as markets shifted focus to the US central bank'’s upcoming policy decision.
The Dow Jones Industrial Average rose 103.6 points, or 0.3%, to 34,108.64, the S&P 500 gained 29.09 points, or 0.73%, to 4,019.65 and the Nasdaq Composite added 113.08 points, or 1.01%, to 11,256.81.
“The market surged with the inflation (data),” said Peter Cardillo of Spartan Capital Securities. He added that the S&P 500 closing over 4,000 suggests that the “year-end rally remains on course.”
Labor Department figures showed the consumer price index (CPI) – a key measure of inflation – rose 7.1% from a year ago in November. This was down from October's pace, fuelling optimism that rapid price increases may soon be moderating.
“There was some excitement early on that the CPI number was once again below expectations - it shows some sequential cooling – but once we saw that initial pop, stock investors kind of reassessed,” said Jason Ware, chief investment officer at Albion Financial Group in Salt Lake City, Utah.
“That probably took some of the steam out of the markets once investors realised tomorrow (Wednesday) very well may be (Fed chair) Jerome Powell throwing cold water on the rally today.”
President Joe Biden reacted with cautious optimism about the US economy, saying that figures gave “a reason for some optimism for the holiday season and I would argue for the year ahead”.
“The CPI print is incrementally good, but it needs to be sustained,” said Venu Krishna, head of US equity strategy at Barclays in New York.
“There is a big question mark whether we can really come to the 2% inflation (Fed target). Perhaps we live in a world in which it will be higher and that means rates will be higher and then multiples will certainly be lower.”
Investors are now awaiting a key rate decision with the Federal Reserve (Fed) set to conclude a policy meeting on Wednesday (Dec 14).
Many expect the Fed to opt for a smaller half-point interest rate increase as effects of its aggressive campaign to cool demand this year trickle through the economy.
Morgan Stanley's chief US economist Ellen Zentner now sees even smaller Fed rate increases, of 25 basis points at the central bank’s February meeting, and no further increases in March, leaving the peak fed funds rate at 4.625%.
Among individual companies, shares of Meta picked up 4.7% and Google parent Alphabet rose 2.5%. – AFP, Reuters
Source: The Sun Daily
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