After last month's inflation cooled more than expected, Wall Street surged Wednesday, with the Federal Reserve Rate hikes, as feared, prompted speculation that they didn't need to be so aggressive.
S&P 500 kicked off shortly after reports showed inflation, the country's biggest economic challenge, slowed to 8.5% at consumer level from 9.1% last month. It was up 2% in a broad rise. in june. Tech stocks, cryptocurrencies, and other investments were among the biggest winners of the morning after the Fed's aggressive rate hikes saw the biggest losses of the year.
The Nasdaq Composite, filled with high-growth and overvalued-looking stocks particularly vulnerable to interest rate volatility, rose 2.5%. Bitcoin rose his 4% above $24,000 and the Dow Jones Industrial Average rose more than 500 points (1.7%) to 33,333.
Much of the slowdown in inflation in July was due to lower gasoline and oil prices. But even after ignoring these and food prices,it could fluctuate sharply from month to month, and economists predicted last month what they call "core inflation." It was steady instead of accelerating like so.
This data tells traders how much interest the Fed will raise. At the next conference began to shrink bets about the rate. According to CME Group, they now see a half-point rate hike as the most likely outcome. The day before they were betting on his 0.75% rate hike, the same as the previous two rises.
Such a difference may not sound like much, but interest rates help determine where prices go across financial markets. Rising interest rates also tend to push prices down on everything from stocks to commodities to cryptocurrencies.
Immediately after the release of the inflation report, bond prices surged and yields fell. Yields on two-year US Treasuries, which tend to track expectations for the Federal Reserve (Fed), fell to 3.12% from 3.27% late Tuesday.
The 10-year yield fell from 2.78% to 2.72%, narrowing how far it fell short of the 2-year yield. Many investors see gaps like this as a pretty reliable signal of an upcoming recession.
Recession fears are rising as the highest inflation in 40 years weighs on households and businesses around the world. The Federal Reserve (Fed) and other central banks have been raising interest rates to slow the economy in hopes of keeping inflation under control, but if they move too aggressively they risk stopping it. I have.
Indeed, inflation remains high and is expected to remain so for some time. But Wednesday's encouraging data nonetheless revitalized Wall Street after Friday's stronger-than-expected jobs report raised hopes for a more aggressive Fed. It has heightened expectations that a peak in inflation, and thus the Federal Reserve's most aggressive rate hike, may be on the horizon.
"This is a step in the right direction, but keep in mind that inflation is many miles away from normalizing," said Morgan Stanley's E- said Mike Lowengart, managing director of investment strategy at Trade.
Inflation data helped equities across Europe rise slightly, while markets that closed early in Asia mostly fell. Germany's DAX rebounded 0.9%, Japan's Nikkei 225 fell 0.6% and Hong Kong's Hang Seng fell 2%.
