The newly released Consumer Price Index (CPI) report, used as a gauge to track inflation, increased 0.4% month-over-month and 7.7% from last year. The inflation data marks its lowest yearly increase since January 2022 and a deceleration of last month’s 8.2%. According to Dow Jones, economists projected a rise of 0.6% and 7.9%.
Tim Courtney of Exencial Wealth commented on today’s CPI report, stating:
“Interest rates are still running everything in markets. With today’s CPI number coming down, the market is now betting pretty clearly that they think the interest rate [rises] are coming close to an end. So, you see those interest rate sensitive stocks doing really, really well.”
Markets responded positively to the new CPI report, with investors betting heavily that the better-than-expected inflation data is a sign that Inflation is cooling and the Federal Reserve will begin to pull back on its aggressive interest rate hike strategy.
The NASDAQ Composite (NASX), S&P 500 (SPX) and Dow Jones (DJIA) had their best day in two years, rising +7.3%, +5.5% and +3.7%, respectively. Tech stocks, which rising inflation has hit the hardest, soared back to life today, with top names such as Amazon (NASDAQ: AMZN) +12%, Meta (NASDAQ: META) +10%, Microsoft (NASDAQ: MSFT) +8%, Apple (NASDAQ: AAPL) +8% and Tesla (NASDAQ: TSLA) +7% leading the charge.
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Disclaimer: Wealthy VC does not hold a long or short position in any of the stocks mentioned in this article.