Live Stock Market News Updates: Stocks Rally Takes a Rest After Biggest One-Day Increase Since 2020

US stocks paused their dramatic rally on Friday morning after slowing CPI inflation data sparked the biggest rally on Wall Street since early 2020.

The S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) posted a modest 0.1% gain at the open, while the Nasdaq Composite (^IXIC) fell below the break-even point. Treasury yields held steady after their biggest one-day drop Thursday in more than a decade.

A reversal in China’s COVID-free policy to reduce the amount of time travelers spend quarantining into the country boosted sentiment in early trading. Oil markets advanced as traders speculated that the move could boost demand for commodities, with West Texas Intermediate (WTI) futures rebounding nearly 3% to above $88 a barrel.

Meanwhile, on the economic data front, the preliminary reading of the University of Michigan Survey of Consumer Confidence for November fell to 54.7 from. 59.9 in October, the lowest level since July.

All three major averages rose on Thursday, each posting the biggest single-day advance since recovering from the throes of a COVID crash more than two years ago. The massive moves were spurred by light October consumer price data that fueled bets that the Federal Reserve could stop tightening financial conditions as early as next year. The S&P 500, Dow and Nasdaq are up 5.5% and 3.7%, or 1,200 points, and 7.4%, respectively.

“Overall, the report suggests that peak inflation may finally be behind us, although inflation may remain elevated for some time,” said Sonya Miskin, head of investment management at BNY Mellon US Macro in a note Thursday.

She noted that the figure supports the smaller 0.50% increase for December telegraphed at this month’s Federal Open Market Committee meeting, and which investors are pricing in.

“However, it is also important not to overemphasize a single report on inflation and the course of policy,” she added.

The Consumer Price Index (CPI) in October rose at an annual rate of 7.7% and increased by 0.4% during the month. On a “basic” basis, which excludes the volatile food and energy components of the report, prices are up 6.3% YoY and 0.3% MoM.

Federal Reserve Chairman Jerome Powell speaks during a press conference following the FOMC meeting on November 2, 2022 (Photo by MANDEL NGAN/AFP via Getty Images)

Despite the moderation, many strategists maintain that the excitement is premature, with Federal Reserve officials still poised to tighten further after President Jerome Powell said last month that policymakers still had “some way to go” to restore price stability – a message that His colleagues at the central bank have since also reverberated in a series of public speeches.

Gregory Dako, chief economist at EY Parthenon, said in comments via email: “The Fed’s over-reliance combined with the fact that economic data will only show the labor market in real time and slowing inflation with lag, increases the odds of Excessive accident. .

Meanwhile, DataTrek’s Nicholas Colas points out another fact: Although inflation trends decline once they peak and begin to decline—as we saw in 1970, 1974, 1980, 1990, 2001 and 2008—this downward shift typically comes with Recessions, and there are no exceptions to the rule.

The turmoil in the cryptocurrency world continued with the emergence of the FTX debacle and the company announced on Friday morning that it was filing for bankruptcy. Billionaire hero Sam Bankman Fried has also stepped down as CEO and is reportedly under investigation by the US Securities and Exchange Commission as his exchange seeks a cash bailout. Bitcoin was trading around $16,500 on Friday morning.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed

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