the Nasdaq Composite (NASDAQ: ^IXIC) The stock jumped about 2% after new economic data showed a decline in inflation, which comforted investors and also led to a decline in Treasury yields. the Dow Jones Industrial Average (DJI: ^DJI) Jumped more than 600 points.
Shares of several artificial intelligence (AI) stocks rose on the news. Semiconductor company Micron technology (NASDAQ: MU) It was trading 5.7% higher as of 12:12 PM ET. Meanwhile, artificial intelligence software companies BigBear.ai (NYSE: BBAY) and C3.ai (NYSE: AI) They traded up 5% and 3%, respectively.
Stocks started to rise yesterday after December’s Producer Price Index (PPI) numbers rose less than expected, indicating that inflation is still trending lower. The Consumer Price Index (CPI) was in the spotlight this morning, which did not disappoint.
Consumer prices in December rose 0.4% from the previous month, slightly beating expectations. However, the core CPI, which excludes more volatile food and gas prices, rose just 0.2%, slightly below expectations, again suggesting that price pressure may be starting to ease. The consumer price index rose 2.9% year-on-year, in line with expectations. The yield on 10-year US Treasury bonds fell by about 12 basis points to 4.67% after reaching high levels in recent weeks.
The report looks good because the bulk of the increase came from a 2.6% jump in energy prices, which is much higher than what we have seen in recent months. Meanwhile, shelter, which has the largest weight in the CPI, continued to show improvement as prices declined.
“Today’s CPI may help the Fed feel more cautious. It won’t change expectations about a pause later this month, but it should dampen some talk about the Fed potentially raising interest rates.” Morgan Stanley Ellen Zentner, chief economic strategist at Wealth Management, told CNBC. “Judging by the initial market response, investors appear to be relieved after a few months of difficult inflation readings.”
In other good news, the major banks reporting earnings this morning produced strong results and showed the economy is on solid footing. Traders betting on what the Fed will do with interest rates this year are still concerned about inflation, but the chances of more than one rate cut this year have increased, although a majority still believe there will only be one.
Today’s inflation report paints a rosy picture. Inflation continues to trend in the right direction, the labor market is strong, and yields may be rising for the right reasons due to economic expansion, so it makes sense for investors to buy the news today. Of course, the situation has been volatile, and I suspect it may remain that way in the near term. Inflation remains above the Fed’s preferred target of 2%, and a poor report may cast doubt on the belief that the nation’s central bank has beaten inflation.
https://s.yimg.com/ny/api/res/1.2/VlU43X0cuHJ286x1IKIUbg–/YXBwaWQ9aGlnaGxhbmRlcjt3PTEyMDA7aD04MDA-/https://media.zenfs.com/en/motleyfool.com/e775e345732b00f644c7eae9494420bd
Source link