by U.S. stock indexes rose sharply on Thursday as Wall Street cheered lighter-than-expected inflation data and followed the results of the midterm elections.
October’s consumer price index (CPI) reflected a 7.7 percent increase from last year and a 0.4 percent increase from the previous month, better than Wall Street expectations. Economists polled by Bloomberg called for a 7.9 percent annual increase and a 0.5 percent monthly increase.
The S&P 500 (^GSPC) rose 4%, while the Dow Jones Industrial Average (^DJI) jumped 850 points, or 2.7%. The technology-focused Nasdaq Composite (^IXIC) rose a whopping 5.6%. Meanwhile, Treasury yields tumbled after the report, and the benchmark 10-year bond fell below 4 percent.
Technology stocks saw sharp gains, with Apple ( AAPL ) and Microsoft Corporation ( MSFT ) each up more than 6%. Shares of Amazon ( AMZN ) were up 10%, Facebook parent Meta ( META ) was up 5% — leading the stock to its biggest weekly gain since July 2013 — and Nvidia ( NVDA ) was up 9%.
The market value of shares increased by $368 billion on Thursday, according to Bloomberg data.
“The first weakening surprise in inflation in several months will inevitably be met with applause from the stock market,” Chief Financial Officer Seema Shah said in a note, adding, however, that Federal Reserve officials will continue to raise interest rates and a break is still elusive.
“Let the market enjoy today, there’s still about 100 basis points of tighter sympathy,” he said.
Elsewhere in the economic data – in the shadow of the consumer price index – unemployment insurance claims rose last week, but remained near historical lows. Initial jobless claims, the most recent snapshot of the labor market, were 225,000, up 7,000 from the previous week, Labor Department data showed.
Thursday’s moves come after each of the major averages fell at least 2% in the previous session amid midterm election uncertainty.
Republicans appeared poised to take control of the House of Representatives, but failed to sweep the polls as expected, dampening optimism for the market-friendly impasse investors were expecting.
While Wall Street awaits political clarity and the vote count is still in progress, Thomas Martin, vice president and senior portfolio manager at GLOBALT Investments, argued that the market is now laser-focused on just one thing: the impact of central bank tightening on inflation.
“So far, the effects do not appear to be significantly different from zero,” he said in a note late Wednesday. “Yes, there have been data points that have hinted at some price declines, but they have not been able to gain sustained momentum.”
Until the latest policy-setting meeting earlier this month, traders were hopeful that Federal Reserve officials would ease their monetary tightening plans as economic data softened. But Chairman Jerome Powell dismissed the idea that a change in the Fed’s path is imminent, with inflation and wages still firmly elevated.
“Recent inflation data has again come in higher than expected,” Powell said. “Price pressures remain evident in many goods and services.”
Wednesday’s renewed de-risking sentiment was also fueled by the rapid collapse of FTX, the cryptocurrency exchange led by billionaire Sam Bankman-Fried. Concerns about the possibility of FTX defaulting after rival Binance returned to an emergency bailout deal to buy the company wreaked havoc on the crypto market, with tremors spreading to other risky assets. Bitcoin (BTC-USD) was around $16,300 on Thursday morning.
On earnings news, shares of ZipRecruiter ( ZIP ) jumped 17% after the online job market raised its full-year outlook and pointed to a $200 million addition to its stock buyback program.
Bumble ( BMBL ) shares slid 15% in extended trading after reporting third-quarter revenue that missed Wall Street estimates and revised downward guidance for the current period due to currency headwinds and Russia’s war in Ukraine.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow him on Twitter @alexandraandnyc
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