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US stocks soared as much as 4% early Thursday after October’s CPI report showed a decline in inflation.The annual US inflation rate was up 7.7% in October, which was below economist estimates of 7.9%.The 10-year US Treasury yield plunged 20 basis points as expectations of a Fed pivot grow.
US stocks soared as much as 4% early Thursday after the October consumer price index showed a cooldown in inflation, potentially giving the Federal Reserve some breathing room in its current interest rate hiking cycle.
The CPI rose 7.7% on an annual basis, below economist estimates for a rise of 7.9%. On a monthly basis, it climbed 0.4% in October, below estimates for a rise of 0.6%. Meanwhile, core monthly inflation, which excludes food and energy, increased 0.3%, below estimates for a rise of 0.5%.
The move in assets was immediate following the CPI release, with the 10-year US Treasury yield plunging an immediate 20 basis points. The move isn’t a surprise to JPMorgan, which estimated a CPI reading of 7.7% would spark a 2.5% to 3.5% surge in the S&P 500.
Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Thursday:
S&P 500: 3,881.32, up 3.54%Dow Jones Industrial Average: 33,378.25, up 2.66% (864.31 points)Nasdaq Composite: 10,875.20, up 5.04%
“Hard to believe that a 7.7% year over year inflation rate is reason for celebration, but the 0.3% monthly change in core CPI reduces pressure on the Fed to raise rates another 0.75% at their next meeting,” Bryce Doty of Sit Fixed Income Advisors told Insider.
Here’s what else is happening this morning:
The fallout from FTX’s ongoing implosion continues. Here’s how the company, once valued at $32 billion, fell so hard that it’s on the verge of bankruptcy.JPMorgan said the FTX fiasco could spark a 25% price decline in bitcoin to $13,000 as trust in the industry is shaken to its core. Tesla was removed from Wedbush’s best ideas list as CEO Elon Musk focuses his attention on Twitter and sells more of his Tesla shares.
In commodities, bonds and crypto:
West Texas Intermediate crude oil rose 0.91% to $86.61 per barrel. Brent crude, oil’s international benchmark, rallied 1% to $93.58.Gold rose 1.26% to $1,735.30 per ounce.The yield on the 10-year Treasury plunged 22 basis points to 3.92%.Bitcoin rose 5.83% to $17,419, while ether jumped 8.85% to $1,277.