- US stocks rose as traders took in slightly cooler inflation figures.
- Consumer prices rose 3.4% year-per-year in April, down from the prior month's 3.5% increase.
- Still, investors have muted expectations for Fed rate cuts by the end of the year.
US stocks jumped on Wednesday as traders took in the latest inflation report, which showed prices cooled slightly in April.
Major averages gained while bond yields tumbled. The 10-year Treasury fell seven basis points to 4.369%.
Consumer prices rose 0.3% last month, cooler than the 0.4% expected. Year-over-year, prices grew 3.4% in April, cooler than the prior month's 3.5% annual increase.
Falling inflation has fueled some hope the Fed is set to issue several interest rate cuts this year, which is bullish for stocks. But investors have mostly accepted that rates will stay higher for longer, with markets anticipating one to three rate cuts by the end of the year, according to the CME FedWatch tool.
"The first downside surprise in inflation since the turn of the year will be a relief to the niggling concerns that inflation was starting to trend upwards again. It will inevitably be well received by the market given that it puts 2024 Fed cuts back on the table," Seema Shah, the chief global strategist at Principal Asset Management said in a note on Wednesday.
Still, the Fed is largely expected to keep interest rates level at its next policy meeting. Traders see a 92% chance rates will stay between 5.25%-5.5% in June.
"It does keep the Fed in a holding pattern, with no rate cuts until September at the earliest and a rate hike looking even less likely," Sonu Varghese, a global macro strategist at Carson Group said on the latest inflation figures.
Here's where US indexes stood at the 9:30 a.m. opening bell on Wednesday:
- S&P 500: 5,278.01, up 0.6%
- Dow Jones Industrial Average: 39,782.29, up 0.57% (+224.18 points)
- Nasdaq composite: 16,612.24, up 0.61%
Here's what else is going on today:
- People are raiding their savings and racking up debt, an expert warns.
- Warren Buffett is hoarding $200 billion as he may see 'storm clouds' ahead, top economist Steve Hanke says.
- The S&P 500 has flashed a bullish indicator pointing to record highs this summer.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil dipped 0.91% to $77.31 a barrel. Brent crude, the international benchmark, dropped 0.95% to $81.61 a barrel.
- Gold climbed 0.49% to $2,369 per ounce.
- The 10-year Treasury yield dropped seven basis points to 4.369%.
- Bitcoin jumped 4% to $64,496.