Relief washed over Wall Street Tuesday, and stocks leaped to one of their best days of the year following a surprisingly encouraging report on inflation.
- The S&P 500 rose 84.15 points, or 1.9%, to 4,495.70.
- The Dow Jones Industrial Average rose 489.83 points, or 1.4%, to 34,827.70.
- The Nasdaq composite rose 326.64 points, or 2.4%, to 14,094.38.
The highly anticipated report showed not only that overall inflation slowed last month , but so did a key underlying figure that economists see as a better indicator of future trends. The slowdown bolstered bets on Wall Street that inflation is cooling enough for the Federal Reserve to finally be done with its market-crunching hikes to interest rates.
Such hopes lifted all kinds of investments, and more than 90% of the stocks in the S&P 500 climbed in a widespread rally, the AP reports. Technology and other high-growth stocks tend to get some of the biggest boosts from easier rates, and a 2.3% rise for Amazon and 2.1% lift for Nvidia were two of the strongest forces pushing the S&P 500 upward. Stocks of smaller companies also got a huge boost, with the Russell 2000 index of small stocks surging 5.4% for its best day in a year. Smaller companies are often seen as more dependent on borrowing cash to grow, which can make them more vulnerable to higher interest rates.
Real-estate stocks and others beaten down particularly hard by higher rates soared to some of the market's biggest gains. After the report's release, Treasury yields in the bond market tumbled immediately as traders flooded into bets that the Fed won't hike rates again. Investors also pushed up the expected timetable for the Fed's first cut to rates, which can act like steroids for financial markets and provide oxygen across the financial system. Traders now see zero chance of a rate increase at the Fed's next meeting on Dec. 13, down from a 14.5% probability a day before, according to data from CME Group.
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Elsewhere on Wall Street, Home Depot rallied 5.4% after it reported stronger profit for the latest quarter than analysts expected.The Atlanta-based retailer, though, also said consumers are reticent to purchase big-ticket appliances, often bought on credit, which has grown expensive because of higher interest rates. Target, Walmart, and other big retailers will report their latest results later this week. They're at the tail end of an earnings reporting season that has been better than analysts expected.
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