Stock rally takes breath after biggest one-day rally since 2020

US stocks paused their dramatic rally on Friday morning after Slowdown in inflation data in the consumer price index caught The densest gathering On Wall Street since early 2020.

S&P 500 Index (^ Salafist Group for Preaching and Combat) and the Dow Jones Industrial Average (^ DJI(Both posted a modest 0.1% gain at the open, while the Nasdaq Composite (NASDAQ)^ ninth) fell below the break-even point. Treasury yields held steady after their biggest one-day drop Thursday in more than a decade.

a A reflection on China’s policy on the non-proliferation of the Corona virus To reduce the amount of time travelers spend in quarantine in the country, morale is spent on early trade. Oil markets advanced as traders speculated that the move could boost demand for commodities, with West Texas Intermediate (WTI) futures rebounding nearly 3% to above $88 a barrel.

Meanwhile, on the economic data front, the preliminary reading of the University of Michigan Survey of Consumer Confidence for November fell to 54.7 from. 59.9 in October, the lowest level since July.

All three major averages jumped on Thursday, each posting their biggest single-day progress since recovering from the pain of the COVID crash more than two years ago. Mega moves were triggered by Lighter consumer price data for October That has fueled bets that the Federal Reserve may stop tightening financial conditions as early as next year. The S&P 500, Dow and Nasdaq are up 5.5% and 3.7%, or 1,200 points, and 7.4%, respectively.

“Overall, the report suggests that peak inflation may finally be behind us, although inflation may remain elevated for some time,” Sonya Miskin, head of investment management at BNY Mellon US Macro, said in a note Thursday.

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She noted that the figure supports the smaller 0.50% increase for December that was telegraphed at this month’s Federal Open Market Committee meeting, which investors are pricing in.

“However, it is also important not to overemphasize a single report on inflation and the course of policy,” she added.

The Consumer Price Index (CPI) in October rose at an annual rate of 7.7% and increased by 0.4% during the month. on me “essential” basiswhich excludes the volatile food and energy components of the report, prices rose 6.3% year-on-year and 0.3% month-on-month.

Federal Reserve Chairman Jerome Powell speaks during a press conference following the FOMC meeting on November 2, 2022 (Photo by MANDEL NGAN/AFP via Getty Images)

Despite the moderation, many strategists maintain that the excitement with Fed officials is premature Still willing to stress After President Jerome Powell said last month that policymakers stillSome ways to go“on restoring price stability — a message that his colleagues at the central bank have since echoed in a series of public speeches.

Gregory Dako, chief economist at EY Parthenon, said in comments via email: “The Fed’s over-reliance combined with the fact that economic data will only show the labor market in real time and slowing inflation with lag, increases the odds of Excessive accident. .

Meanwhile, DataTrek’s Nicholas Colas points out another fact: Although inflation trends decline once they peak and begin to decline—as we saw in 1970, 1974, 1980, 1990, 2001, and 2008—this downward shift typically comes with Recessions, and there are no exceptions to the rule.

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disturbance Continued into the world of coding Such as The FTX disaster unfolds And the company announced on Friday morning that it is Application for bankruptcy. Billionaire Crypto Champion Sam Bankman-Fried Has Also Stepped Down As CEO, Reportedly So Under investigation by the US Securities and Exchange Commission As the stock market seeks a cash bailout. Bitcoin was trading around $16,500 on Friday morning.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed

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