Wall Street surges on signs of end to Fed’s rate-hike campaign

The S&P 500 and Nasdaq closed with their largest daily percentage gains since April 27 on Tuesday, fueled by softer-than-expected inflation data that hinted at a possible end to the Federal Reserve’s interest rate hike cycle.

The S&P 500 surged by 84.15 points, or 1.91 percent, to 4,495.7, a two-month high. The Dow Jones Industrial Average climbed 1.43 percent, reaching 34,827.7, while the Nasdaq Composite soared 326.64 points, or 2.37 percent, reaching 14,094.38.

Amazon surged by 3.1 percent, and Nvidia rose by 1.9 percent, contributing significantly to the S&P 500’s upward movement.

The S&P 500 real estate sector posted a 5.3 percent gain, while the utility sector experienced a 3.9 percent increase. The small-cap Russell 2000 index saw a 5.4 percent surge, outpacing the broader market.

Among individual stocks, Snapchat soared 7.5 percent after the announcement that Amazon would allow Snapchat users in the U.S. to purchase select products directly from the social media app. Meanwhile, Home Depot shares jumped 5.4 percent after the U.S. home improvement chain surpassed quarterly profit expectations.

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Trading volume on U.S. exchanges reached 12.62 billion shares, exceeding the 11.09 billion average for full-session trading days over the past 20 days.

CPI report sparks end of Fed rate hike talk

Data show U.S. consumer prices remained steady as lower gasoline prices offset other expenses in October. As a result, this recorded the smallest annual increase in underlying inflation in two years. This development sparked discussions about the possibility of the Fed ceasing its interest rate hikes.

The consumer price index (CPI) rose 3.2 percent over the 12 months ending in October, falling below economists’ expectations and down from the 3.7 percent increase seen in September.

The slowdown reinforced expectations that inflation is easing sufficiently for the Federal Reserve to conclude its aggressive interest rate hikes, which is good news for Wall Street.

“Getting some softer inflation readings provided markets some additional comfort that the Fed isn’t going to have to put in place a significant amount of additional restrictive policy to continue to bring consumer prices lower,” said Craig Fehr, head of investment strategy at Edward Jones, as quoted by Reuters.

Since March 2022, the Fed has raised its benchmark interest rate by 525 basis points, bringing it to its highest level since 2001. This drastic move aims to cool down the economy and bring inflation back to its two percent target.

Asian stocks gained

On Wednesday, Asian stocks reached a two-month peak amid expectations of Chinese stimulus measures and expectations of the Fed halting its interest rate hikes in the U.S.

The MSCI’s Asia-Pacific index, excluding Japan (.MIAPJ0000PUS), surged by 2.3 percent during the mid-session break in Hong Kong. This is its highest level since mid-September and is heading for its most significant daily increase since January.

The Hang Seng index increased almost three percent, surpassing its 50-day moving average, while Japan’s Nikkei saw a rise of 2.3 percent.

Asia’s market optimism was further fueled by a Bloomberg News report about China’s intention to offer 1 trillion yuan ($137 billion) in low-cost financing to bolster the housing market.

As a result, the mainland CSI300 index increased by 0.6 percent, while the Hang Seng index for mainland property developers surged by 4.3 percent.