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- US stocks rocketed higher on Tuesday as markets cheered slowing inflation in October.
- Treasury yields plummeted as result, with the 10-year rate dropping 18 basis points.
- The soft inflation report reinforced views that the Fed is done hiking rates.
Investors sent stocks soaring on Tuesday, cheering the October Consumer Price Index report that showed inflation slowed more than expected last month.
The Dow Jones Industrial Average soared 565 basis points, while the S&P 500 and Nasdaq 100 both rocketed more than 2%.
The latest CPI report reinforced a potential end to the interest-rate hikes that have hurt growth for over the past year, making a soft landing scenario more likely for the US economy. The odds of a rate hike at the Federal Reserve's December meeting fell from 14% to 0% following the report, according to the CME FedWatch Tool.
"The inflation fever has broken in the United States," Bill Adams, Chief Economist for Comerica Bank reacted, adding: "October's cooler than expected CPI report keeps the Fed on course for rate cuts in 2024."
The inflation report saw prices remain flat in October on a monthly basis versus views for a 0.1% uptick. The annual rate slowed to 3.2%, down from 3.7% in September and below views for 3.3%. Core inflation of 4% also came in below forecasts.
Meanwhile, Treasury yields plunged, with the 10-year rate diving 18 basis points to 4.45%, and the two-year yield plummeting 20 basis points to 4.84%. In prior months, the market has suffered a major sell off as investors worried of further interest rate hikes to come.
"Core CPI came in below expectations with prices lower across the board. This is encouraging for markets and suggests a December hike is off the table," Damanick Dantes, a portfolio strategist at Global X, said.
Here's where US indexes stood at 11:30 a.m. ET on Tuesday:
- S&P 500: 4,502.20, up 2.07%
- Dow Jones Industrial Average: 34,911.48, up 1.67% (+573.61 points)
- Nasdaq Composite: 14,077.93, up 2.25%
Here's what else is happening today:
- Gear up for massive interest cuts in 2024 as a recession is set to kick in, UBS said.
- Warren Buffett's Berkshire Hathaway has sold over 60% of BYD. Here are five possible reasons why.
- Top Wall Street billionaires are nervous about a world war. Markets don't seem as anxious.
- Investors are the most bullish on bonds since the depth of the Great Financial Crisis.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil rose 0.33% to $78.58 a barrel. Brent crude, the international benchmark, climbed 0.53% to $82.82 a barrel.
- Gold inched up 0.48% to $1,956.47 per ounce.
- The 10-year Treasury yield dropped 18 basis points to 4.45%.
- Bitcoin was essentially flat at $36,542.