Wall St rallies as inflation cools in June
By Johann M Cherian and Bansari Mayur Kamdar
(Reuters) — Wall Street rallied on Wednesday, led by gains in rate-sensitive megacap growth stocks after data showed inflation cooled further in June and boosted hopes that the Federal Reserve was nearing the end of its monetary tightening cycle.
U.S. consumer prices rose modestly in June and logged their smallest annual increase in more than two years as inflation continued to subside.
The much awaited U.S. Labor Department report showed growth in core consumer prices, which excludes food and energy, eased to 4.8% from 5.3% in May on an annual basis. Economists had expected a 5% rise.
In the 12 months through June, the consumer prices (CPI) advanced 3.0%. It was the smallest year-on-year increase since March 2021 and followed a 4.0% rise in May.
Market participants were now betting with a 26% probability that the central bank would lift short-term borrowing costs by 25 basis points in November this year, compared with a 34% probability before the data was reported.
An overwhelming majority of traders continue to expect the Fed to raise the benchmark rate to the range of 5.25%-5.5% later this month.
«The CPI report has come in lighter-than-expected both on the headline and on the core and the markets are reacting in a positive fashion to that report,» said Art Hogan, chief market strategist at B Riley Wealth.
«Its policy implications are clear, the Fed is at or near the end of this rate hike cycle.»
At 09:46 a.m. ET, the Dow Jones Industrial Average was up 282.05 points, or 0.82%, at 34,543.47, the S&P 500 was up 40.07 points, or 0.90%, at 4,479.33, and the Nasdaq Composite was up 161.15 points, or 1.17%, at 13,921.85.
Megacap growth and
Read more on investing.com
