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Investing.com — The Dow racked up gains Thursday, led by tech after data showing slowing inflation stoked hopes for less hawkish Federal Reserve rate hikes, pushing Treasury yields lower.
The Dow Jones Industrial Average gained 3.5%, or 1,131 points, the Nasdaq was up 6.6%, and the S&P 500 gained 5%.
The Labor Department said Thursday its consumer price index rose 0.4% last month, confounding expectations for a 0.6% rise. Core inflation, which is considered a more accurate gauge of inflation slowed to 0.3% from 0.6%, versus expectations for a 0.5% rise.
“The softening of core inflation in the October release is welcome news for the Fed,” Morgan Stanley said in a note. But cautioned that the optimism over slowing inflation could be unraveled should incoming data show labor markets remain tight.
“Signs of deceleration will help Fed officials moderate the reduction in the pace of tightening, though a stronger than expected December payroll print (300k+) could still complicate the issue at the margin,” it added.
Pricing in the prospect of a less hawkish Fed, Treasury yields slumped, with the 2-year Treasury yield, which is sensitive to Fed policy, falling to two-week lows, helping big tech surge.
Apple Inc (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL) were up about 7%, while Meta Platforms (NASDAQ:META) gained more than 10%.
Consumer stocks also reigned supreme with Amazon (NASDAQ:AMZN) leading the charge, up more than 12% on bets that slowing inflation pressure could ease the squeeze on consumers and encourage further spending.
Homebuilders, led by PulteGroup Inc (NYSE:PHM), played a role in the market melt-up as bets on smaller Fed rate hikes pushed mortgage rates back below 7%, spurring optimism for renewed demand for new homes.
The average rate on the 30-year fixed plunged 60 basis points from 7.22% to 6.62%, Mortgage News Daily reported. on bets that the smaller rate hikes could help
In earnings news, Six Flags Entertainment New (NYSE:SIX) surged more than 13% despite reporting quarterly results that fell short of Wall Street estimates. The theme park operator, however, also said it had struck an agreement with investment firm H Partners allowing the latter to up its stake in the company to 19.9% from 14.9%.
Rivian Automotive Inc (NASDAQ:RIVN) left its production guidance intact and reported a narrower than expected loss, sending its share price up more than 19%.
Bumble (NASDAQ:BMBL), meanwhile, cut its losses to trade 9% higher amid the broader market rally even after delivering softer guidance and third-quarter revenue that missed analyst estimates as the impact of a stronger dollar and the ongoing Russia-Ukraine war weighed.
