©Reuters. Screens show the trading information for ExxonMobil on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. Dec. 9, 2022. REUTERS/Brendan McDermid
By Ankika Biswas and Johann M. Cherian
(Reuters) – Wall Street’s major indices rose on Tuesday, led by interest-sensitive growth stocks, after a less-than-expected rise in US consumer prices raised hopes that the Federal Reserve could soften its aggressive stance on rate hikes.
The benchmark hit a three-month high in morning trading after data showed US consumer prices barely rose in November amid declines in the cost of gasoline and used cars, leading to the smallest annual increase in inflation in nearly a year.
Increasing bets on a potential slowdown in the pace of interest rate hikes after the report led to government bond yields falling and drove strong gains in megacap stocks, with Alphabet (NASDAQ:) Inc, Nvidia (NASDAQ:) Corp, Amazon. com Inc (NASDAQ:) and Apple Inc (NASDAQ:) rose between 4.8% and 7.3%. [US/]
Fed Funds futures prices implied a high probability that the Federal Reserve would follow the widely expected half-point rate hike on Wednesday with a smaller rate hike of 25 basis points in February, ultimately keeping rates as low as 4.5-4 .75%.
“The Fed has raised rates quite a bit over the course of this year and we are starting to see the real results today,” said Art Hogan, chief market strategist at B. Riley Financial.
“I think that tells us that when the Fed meets tomorrow, they’ll probably be able to say we’re raising rates by less than they’ve been, by 50 basis points, and the place where we stop will probably be.” be 5%,” Hogan said.
The U.S. Labor Department report found that consumer prices rose 7.1% year on year in November, while the base rate, excluding volatile food and energy prices, rose 6.0%. Economists were expecting a 7.3% increase in overall CPI and a 6.1% increase in core rates.
The figures follow slightly higher-than-expected producer prices from November last week, which, however, signaled a moderation in the trend.
Fears that the Fed’s aggressive policy tightening will push the economy into recession have sent the benchmark S&P 500 down 14.2% this year.
With Tuesday’s gains, the tech-heavy Nasdaq and the S&P 500 were on track to recoup much of their monthly losses.
The CBOE volatility index, also known as Wall Street’s fear gauge, reached a one-week low of 21.46, reflecting investors’ fears receding.
At 9:48 a.m. ET, the S&P 500 was up 587.00 points or 1.73% to 34,592.04, the S&P 500 was up 107.05 points or 2.68% to 4,097.61 and was up 423, 58 points or 3.80% up to 11,567.32.
Oracle Corp (NYSE:) rose 4.6% on better-than-expected quarterly revenue, while Pinterest (NYSE:) Inc gained 10.9% after Piper Sandler upgraded shares of the social media platform from “neutral” to “overweight.”
Emerging issues outnumbered them with a ratio of 12.94 to 1 on the NYSE and a ratio of 6.13 to 1 on the Nasdaq.
The S&P index recorded 18 new highs in 52 weeks and no new lows, while the Nasdaq recorded 57 new highs and 34 new lows.