Stocks had their best day in years Thursday after a report showed inflation in the US slowed last month by more than expected:
- The benchmark S&P 500 surged 207 points, or 5.5%, to 3,956.
- The Dow rose 1,201 points, or 3.7%, to 33,715.
- The tech-heavy Nasdaq fared the best, climbing 760 points, or 7.3%, to 11,114.
- For the S&P and Nasdaq, it was the best day since 2020, per CNBC. The Dow had its best day since 2021.
Investors took the new inflation data as a sign that the worst may finally be behind us, though analysts cautioned it was premature to declare victory, per the AP. Some of the most dramatic action was in the bond market, where Treasury yields tumbled sharply as investors pared bets for how aggressive the Federal Reserve will be in hiking interest rates to get inflation under control. Such hikes have been the main reason for Wall Street's struggles this year and are threatening a recession. The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, fell to 3.85% from 4.10% late Wednesday, which is a major move for the bond market. The two-year yield, which more closely tracks expectations for Fed action, dropped to 4.32% from 4.58%.
All the action stemmed from a government report showing that inflation slowed in October for a fourth straight month since hitting a peak of 9.1% in June. The reading of 7.7% was better than the 8% economists were expecting. Perhaps more important, inflation slowed more than expected after ignoring the effects of food and energy prices. "Interest rates are still running everything in markets," Exencial Wealth's Tim Courtney tells CNBC. "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.”
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