As inflation in the U.S. slowed down, stock prices climbed on Wednesday.
The S&P 500 index concluded the day with a 0.75 percent increase, while the Dow Jones Industrial Average saw a rise of approximately 0.25 percent. The Nasdaq Composite, which focuses on tech stocks, led the upward trend by surging over one percent.
The Consumer Price Index (CPI) report reached its lowest rate since March 2021, sparking renewed optimism among officials at the Federal Reserve. Senior economist at Interactive Brokers José Torres said that markets had surged due to the prevailing optimism that the Fed is nearing the conclusion of its tightening campaign.
Leading technology companies continued their upward momentum, with Nvidia seeing a 3.5 percent increase and Meta Platforms reporting a 3.7 percent rise.
Recursion Pharmaceuticals surged by 78 percent following the announcement that Nvidia planned to invest $50 million to enhance its drug-discovery enterprises.
Wednesday also witnessed significant increases in bank stocks. Citigroup saw its shares rise by 1.8 percent, and Goldman Sachs experienced a 1.7 percent increase.
Regional banks also performed well. Comerica recorded a notable 3.1 percent increase, while Zions Bancorporation saw a jump of 2.8 percent.
Domino’s Pizza saw an increase of 11.1 percent in its stock, marking the largest gain in the index. The surge came following an announcement about its partnership that would allow customers to order pizzas through Uber Eats.
“The trend that investors have been waiting for is finally here, softer Core CPI prints or hints of pre-COVID normality,” said Alexandra Wilson-Elizondo, deputy chief investment officer of Multi-Asset Solutions at Goldman Sachs Asset Management.
According to the recent inflation report released by the U.S. government, consumers experienced a three percent increase in prices for gasoline, food and other goods compared to the previous year in June. This rate is lower than the four percent inflation recorded in May and the over nine percent inflation observed last summer.
Following the release of the more moderate inflation data, Treasury yields experienced a decline in the bond market as traders scaled back their expectations for Fed actions later this year.
The 10-year Treasury yield decreased from 3.98 percent to 3.86 percent compared to the previous day. Meanwhile, the two-year Treasury yield also dropped from 4.89 percent to 4.73 percent.
Wall Street’s performance boosts Asian markets
Meanwhile, Asian stock markets experienced an upswing on Thursday local time following Wall Street’s return to its highest level in over a year. During morning trading, Japan’s main stock index, the Nikkei 225, increased by 1.3 percent to 32,358.33. The Australian S&P/ASX 200 also witnessed a rise of 1.4 percent to reach 7,236.80. The Kospi gained almost one percent in South Korea to reach 2,599.75.
Hong Kong’s Hang Seng index experienced an increase of 2.3 percent, reaching 19,296.71, while the Shanghai Composite index gained 0.8 percent to reach 3,220.19.
Sony Group Corp. soared 5.1 percent in Tokyo after Goldman Sachs Group Inc. upgraded its recommendation from neutral to buy.
In Hong Kong, tech stocks saw a fourth consecutive day of rallies following a meeting between Chinese Premier Li Qiang and top executives of leading technology companies.