The US stock futures ticked higher off late as futures tied to S&P 500 index saw an increase of ~0.26%. Dow Jones Industrial Average futures went up by ~66 points, or ~0.18%, with Nasdaq 100 futures advancing ~0.25%. Late Tuesday, the House of Representatives saw the passing of bill which focused on averting the government shutdown. Now, as the regulatory process, the measure will go to Senate. If this gets cleared by the lawmakers, the legislation will then head to Mr. President, Joe Biden.
Wall Street believes that fight over inflation is over as, on 14th November, S&P 500 saw an increase of ~1.9%, with Nasdaq Composite rising by ~2.4%. For both the indexes, this was the best day since April. Dow Jones Industrials Average was able to add nearly 490 points. This exhibits an increase of ~1.4%.
Why traders believe that fight over inflation is over? This is because of the gains in the indexes which were seen on Tuesday. Such strong gains were seen after October’s consumer price index report, which has been tagged as key inflation metric. The CPI report came in lower than 0.1% increase which global economists were expecting. Instead, CPI was flat on the monthly basis. Because of this reading, investors celebrated and they sent the stocks soaring believing that the US Federal Reserve might soon end its rate-hiking campaign.
On the year-over-year basis, CPI now comes at 3.2% higher than this was 12 months ago. This exhibits the lowest growth level over the past several years. At the worst levels of 2022, CPI growth merely climbed more than 9%. As expected, energy massively supported the CPI report for the month. Gasoline prices saw a decline of ~5% in October, mitigating the increases in several other areas and pulling energy index down by ~2.5% for the month.
CPI report which was released did all the things which investors were expecting. As the result of this report, experts have confirmed disinflationary trend, and economy’s cooling. Therefore, traders believe that the US Federal Reserve might be done with its rate hikes.
Experts believe that the US central bank might not cut the interest rates anytime soon because housing market remained strong. However, rate hikes are expected to end. Therefore, given the Tuesday’s move in the global indexes, investors can conclude that inflation is not a serious threat as of now.