US consumer prices rise moderately, making a rate cut more likely
U.S. consumer prices rose moderately in July and the annual increase in inflation slowed to below 3% for the first time since early 2021, further strengthening expectations the Federal Reserve will cut interest rates next month.
Sign Up Here: Inflation Fears Ease, Stocks Rally on Strong Earnings
New York (Reuters) - Wall Street rallied on Wednesday, with the S&P 500 and Nasdaq indexes hitting fresh all-time highs, as strong corporate earnings and easing inflation concerns outweighed fears of rising interest rates.
The Dow Jones Industrial Average rose 173.63 points, or 0.50%, to 34,797.71, the S&P 500 gained 38.12 points, or 0.85%, to 4,474.75 and the Nasdaq Composite added 169.23 points, or 1.16%, to 14,895.77.
Earnings Beat Expectations
Several major companies reported better-than-expected earnings, boosting investor confidence. Alphabet Inc (GOOGL.O), the parent company of Google, surged 6.5% after its quarterly revenue beat estimates, driven by strong advertising sales. Microsoft Corp (MSFT.O), which also reported strong results, climbed 4.3%.
Inflation Concerns Ease
Inflation worries have been a key concern for investors this year, leading to fears of aggressive interest rate hikes by the Federal Reserve. However, recent data suggesting a possible peak in inflation has eased some of these concerns.
"We're seeing a bit of a cooling off in the economy, and that's giving people hope that maybe the Fed doesn't have to be as aggressive with interest rate hikes as they were initially thinking," said Art Hogan, chief market strategist at National Securities.
Rate Hike Outlook
The Federal Reserve is widely expected to raise interest rates by 50 basis points at its next policy meeting in May. However, some investors are now expecting the central bank to slow down the pace of rate hikes later this year, as inflation shows signs of cooling.
"The market is trying to figure out what the Fed is going to do next," said Peter Cardillo, chief market economist at Spartan Capital Securities. "It's a delicate balancing act, as they want to control inflation without tipping the economy into recession."
Other Market Movers
Tesla Inc (TSLA.O) climbed 5.9% after announcing a 10-for-1 stock split.
Apple Inc (AAPL.O) rose 2.5% after reporting strong quarterly results.
Amazon.com Inc (AMZN.O) gained 4.2% on its better-than-expected earnings.
Looking Ahead
While the stock market rally is a positive sign, investors are still cautious about the economic outlook. The war in Ukraine, supply chain disruptions and rising energy prices continue to pose risks to the global economy.
"There's still a lot of uncertainty in the world, and the market is going to be volatile," said Hogan. "But for now, the earnings season is going well, and that's giving the market some momentum."
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New York (Reuters) - Wall Street rallied on Wednesday, with the S&P 500 and Nasdaq indexes hitting fresh all-time highs, as strong corporate earnings and easing inflation concerns outweighed fears of rising interest rates.
The Dow Jones Industrial Average rose 173.63 points, or 0.50%, to 34,797.71, the S&P 500 gained 38.12 points, or 0.85%, to 4,474.75 and the Nasdaq Composite added 169.23 points, or 1.16%, to 14,895.77.
Earnings Beat Expectations
Several major companies reported better-than-expected earnings, boosting investor confidence. Alphabet Inc (GOOGL.O), the parent company of Google, surged 6.5% after its quarterly revenue beat estimates, driven by strong advertising sales. Microsoft Corp (MSFT.O), which also reported strong results, climbed 4.3%.
Inflation Concerns Ease
Inflation worries have been a key concern for investors this year, leading to fears of aggressive interest rate hikes by the Federal Reserve. However, recent data suggesting a possible peak in inflation has eased some of these concerns.
"We're seeing a bit of a cooling off in the economy, and that's giving people hope that maybe the Fed doesn't have to be as aggressive with interest rate hikes as they were initially thinking," said Art Hogan, chief market strategist at National Securities.
Rate Hike Outlook
The Federal Reserve is widely expected to raise interest rates by 50 basis points at its next policy meeting in May. However, some investors are now expecting the central bank to slow down the pace of rate hikes later this year, as inflation shows signs of cooling.
"The market is trying to figure out what the Fed is going to do next," said Peter Cardillo, chief market economist at Spartan Capital Securities. "It's a delicate balancing act, as they want to control inflation without tipping the economy into recession."
Other Market Movers
Tesla Inc (TSLA.O) climbed 5.9% after announcing a 10-for-1 stock split.
Apple Inc (AAPL.O) rose 2.5% after reporting strong quarterly results.
Amazon.com Inc (AMZN.O) gained 4.2% on its better-than-expected earnings.
Looking Ahead
While the stock market rally is a positive sign, investors are still cautious about the economic outlook. The war in Ukraine, supply chain disruptions and rising energy prices continue to pose risks to the global economy.
"There's still a lot of uncertainty in the world, and the market is going to be volatile," said Hogan. "But for now, the earnings season is going well, and that's giving the market some momentum."
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