news365 Stocks rose sharply on Wednesday after a key inflation reading showed a better-than-expected slowdown for rising prices.
The Dow Jones Industrial Average jumped 427 points, or roughly 1.3%. The S&P 500 gained 1.8% and hit its highest level since early May, while Nasdaq Composite rose 2.5%.
The headline consumer price index for July rose 8.5% year over year, and was flat compared to June. Economists surveyed by Dow Jones were expecting increases of 8.7% and 0.2%, respectively.
Core inflation, which strips out volatile food and energy prices, also saw a smaller-than-expected increase.
The Federal Reserve will weigh the report, along with other key economic data, ahead of its September meeting where it is slated to hike interest rates again.
“The deceleration in the Consumer Price Index for July is likely a big relief for the Federal Reserve, especially since the Fed insisted that inflation was transitory, which was incorrect. … If we continue to see declining inflation prints, the Federal Reserve may start to slow the pace of monetary tightening,” said Nancy Davis, founder of Quadratic Capital Management.
Major tech stocks were outpacing the broader market on Wednesday, with Facebook-parent Meta rising 5.7% and Netflix gaining more than 4%. Salesforce was the best performer in the Dow, rising 3.6%.
Earnings season also continues, with Disney’s quarterly results due after the bell.
