Stock Market Soars On Lower Inflation Rate, Led By Nasdaq, Consumer Discretionary, Tech Stocks
The stock market soared Thursday, led by the Nasdaq, after inflation came in at a lower-than-expected annual rate of 7.7%. Consumer discretionary and technology stocks led the charge. Amazon (AMZN), up more than 8%, and Apple (AAPL), up 5%, were among the blue chip stocks that shot up.
The Nasdaq composite jumped 5.7%. The Dow Jones Industrial Average rose 2.5% and the S&P 500 gained 3.9%. The small-cap Russell 2000 index gained 3.9%.
Volume rose on both the NYSE and the Nasdaq vs. the same time on Wednesday.
The yield on the benchmark 10-year Treasury note plunged more than 30 basis points to 3.84%. Crude oil prices fell 1% to $85 per barrel.
Stock Market Jumps On Low Inflation
The Labor Department’s consumer price index (CPI) rose 0.4% in October, cooler than estimates that expected a 0.7% rise vs. the previous month. Consumer inflation rose 7.7% year over year, lower than the projected 8% increase and below last month’s 8.2% annual inflation rate. Core prices were up 6.3%. Both consumer prices and core prices were lower than economists expected.
Meanwhile, first-time unemployment claims also came out at 8:30 a.m. ET Initial claims rose to 225,000 vs. 217,000 the previous week.
After the inflation numbers were released, the probability that the Fed will raise rates by 0.50% shot up to 80.6%, while the chance for a 75-basis-point hike declined to 19.4%, according to the CME FedWatch tool.
But John Lynch, chief investment officer for Comerica Wealth Management, cautioned that investors may be reacting too optimistically to the easing of headline inflation. “We believe this is yet another triumph of hope over reality. Sustained price pressures in housing, wages and energy indicate a prolonged battle against inflation. Indeed, Fed Chair Jerome Powell last week was unambiguous in his comments that rates would remain higher for longer.”
Asian stocks fell Thursday but stock markets in Europe climbed in response to the inflation numbers in the U.S. The London FTSE 100 gained 0.5% while the German DAX climbed 2.5% and the French CAC 40 rose 1.3%.
Meanwhile, investors seemed to have already forgotten Tuesday’s midterm elections, which showed the Republican Party had likely gained control of the House but that control of the Senate still was undecided.
EV Stocks Soar On Earnings
Shares of electric-vehicle maker Rivian Automotive (RIVN) soared 17% after it beat earnings views but narrowly missed analysts’ sales estimates.
Chinese EV startup Nio (NIO) reported mixed third-quarter earnings results early Thursday. It also gave conservative guidance in the wake of Covid-related production curbs. Nio stock jumped 11% after tumbling Wednesday to near two-year-plus lows.
Big pharma AstraZeneca (AZN) jumped more than 7% Thursday after reporting Q3 earnings and sales that beat estimates. AZN shares are forming a cup base with a buy point of 68.36.
Veru (VERU) stock collapsed Thursday after the Food and Drug Administration’s advisors voted against the company’s cancer-drug-turned-Covid treatment.
Six Flags (SIX) jumped more than 15% after amending its existing cooperation agreement to permit H Partners to increase its beneficial ownership of Six Flags common stock to 19.9%.
The Innovator IBD 50 ETF (FFTY) gained 3.4%, led by Medpace (MEDP) and Wingstop (WING).
Electric-vehicle giant Tesla (TSLA) traded up 6.6% Thursday as it tries to end a four-day losing streak.
Follow Michael Molinski on Twitter @IMmolinski
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