Stocks Climbed Amid Optimistic October Inflation Report…..
U.S. stocks posted its biggest daily gain since 2020 following data on October’s consumer price inflation (CPI), which came in cooler-than-expected . The data seemed to curb expectations regarding how aggressive the Fed could remain with its monetary policy tightening. Treasury yields and the U.S. dollar tumbled to provide fuel for the stock rally, while crude oil and gold prices traded higher amid the decisive moves in the bond and currency markets. The inflation report overshadowed the ongoing turmoil in the cryptocurrency markets as crypto exchange FTX.com teeters on the brink of collapse. Earnings results continue to pour in, as Wynn Resorts and Rivian Automotive both posted losses, but both offered some upbeat guidance. In other economic news, jobless claims came in higher than expected for last week. Asian stocks finished lower as the global markets await the undetermined U.S. midterm elections, and European stocks ended decisively higher in the wake of the U.S. inflation data.
The Dow Jones Industrial Average jumped 1,201 points (3.7%) to 33,715, the S&P 500 Index soared 208 points (5.5%) to 3,956, and the Nasdaq Composite skyrocketed 761 points (7.4%) to 11,114. In heavy volume, 5.7 billion shares of NYSE-listed stocks were traded, and 6.3 billion shares changed hands on the Nasdaq. WTI crude oil gained $0.64 to $86.47 per barrel. Elsewhere, the gold spot price increased $44.00 to $1,757.70 per ounce, and the Dollar Index plummeted 2.5% to 108.04.
Consumer price inflation comes in cooler than expected in October, jobless claims accelerate…..
The Consumer Price Index (CPI) rose 0.4% month-over-month (m/m) in October, compared to the Bloomberg consensus estimate calling for a 0.6% gain, and matching September’s unrevised increase. The core rate, which strips out food and energy, gained 0.3% m/m, below expectations of a 0.5% rise, and south of September’s unadjusted 0.6% gain. Compared to last year, prices were 7.7% higher for the headline rate, below estimates calling for the rate to decline to a 7.9% increase from the prior month’s unrevised 8.2% rise. The core rate was up 6.3% y/y, south of projections of a 6.5% gain, and versus September’s unadjusted 6.6% rise.
The Bureau of Labor Statistics (BLS) said the index for shelter contributed over half of the monthly increase in today’s report, and gasoline and electricity prices rose, though natural gas prices decreased. Food prices also increased, along with motor vehicle insurance, recreation, new vehicles, and personal care. Prices for used cars and trucks, medical care, apparel, and airline fares declined.
Weekly initial jobless claims (chart) came in at a level of 225,000 for the week ended November 5, above estimates of 220,000 and the prior week’s upwardly revised 218,000 level. The four-week moving average dipped by 250 to 218,750, and continuing claims for the week ended October 29 rose by 6,000 to 1,493,000, slightly above estimates of 1,492,000. The four-week moving average of continuing claims increased by 32,250 to 1,450,250.
Treasury yields tumbled following the inflation data, with the yield on the 2-year note plunging 31 bps to 4.32%, the yield on the 10-year note dropping 33 bps to 3.82%, and the 30-year bond rate falling 26 bps to 4.05%.
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