Wall St set to open sharply higher as data points to easing inflation
By Sruthi Shankar and Amruta Khandekar
(Reuters) — The main U.S. stock indexes were poised for strong opening gains on Tuesday after cooler-than-expected inflation data boosted expectations that the Federal Reserve was done raising interest rates.
Data showed that U.S. consumer prices were unchanged in October amid lower gasoline prices, and underlying inflation showed signs of slowing.
In the 12 months through October, the CPI climbed 3.2% after rising 3.7% in September, while economists polled by Reuters had forecast a 3.3% gain on a year-on-year basis.
Core prices, which exclude the volatile food and energy components, rose 4.0%, below economists' estimate of a 4.1% increase.
«We're happy to see both headline and core CPI come in lower than expected. It's telling us that the Fed is done, there's nothing left for it to do here,» said Thomas Hayes, chairman at hedge fund Great Hill Capital at New York.
«You have to keep an eye on the potential for deflation, but right now this is Goldilocks. This is what the Fed was looking for, slowing inflation, slowing labor market and the economy's holding up at the same time.»
Following the data, traders erased bets the Fed will raise borrowing costs any further and piled into bets on rate cuts starting by May.
U.S. Treasury yields dropped after the data, with the two-year yield, which best reflects short-term interest rate expectations, sliding to two-week lows of 4.872%. [US/]
That in turn lifted megacap-growth stocks such as Nvidia (NASDAQ:NVDA), Alphabet (NASDAQ:GOOGL), Amazon.com (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA) up between 1.8% and 4.3% in premarket trading.
Wall Street's main indexes have seen a strong rebound in November, driven by a better-than-expected earnings
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