Stock Market Today: Dow racks up gains as cooling inflation sinks Treasury yields
Investing.com — The Dow closed higher Tuesday as sliding Treasury yields paved the way for tech stocks to rack up gains after a cooler-than-expected inflation report supported investor expectations that the Federal Reserve's hiking cycle has ended.
By 16:00 ET (21:00 GMT), the Dow Jones Industrial Average was up 489 points or 1.4%, while the S&P 500 was up 1.9% and the NASDAQ Composite was up 2.4%.
The consumer price index in October slowed to a reading of 0% from 0.4% the prior month that was above economists expectations for a reading of 0.1%. The slowing than expected reading, added to expectations that the Federal Reserve isn’t likely to raise interest rates again.
“October CPI was soft on the services side, and a November print like this would not meet the bar we previously set for an additional hike in December,” Morgan Stanley said in a note on Tuesday. “We think soft inflation and still tight financial conditions will keep the Fed on hold,” it added.
Traders now expect the Fed to keep rates hold and deliver a first rate cut in May, according to Investing.com’s Fed Rate Monitor Tool.
Treasury yields fell sharply on the report, with the yield on 2-year Treasury falling 21 basis points to 4.832%, while the yield on the 10-year Treasury dropped 18 basis points to 4.455%.
These gains followed the release of data showing headline inflation in the U.S. slowed by more than expected in October, in a boost for Federal Reserve officials keen on corralling price pressures in the world's largest economy.
Big tech was led higher by Alphabet (NASDAQ:GOOGL) and Meta Platforms (NASDAQ:META) as sentiment on growth sectors of the market was supported by dip in Treasury yields.
A more than 3% rise in chip stocks, meanwhile, also
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