Tamer-Than-Expected Inflation Data Contributing To Continued Strength On Wall Street

Stocks have moved sharply higher in morning trading on Tuesday, extending the rally seen over the course of the previous session. With the continued upward move, the major averages have largely offset the steep losses posted last week.

The major averages have pulled back off their best levels in recent trading but currently continue to post strong gains. The Dow is up 320.77 points or 0.9 percent at 34,325.81, the Nasdaq is up 288.37 points or 2.6 percent at 11,432.11 and the S&P 500 is up 71.17 points or 1.8 percent at 4,061.73.

The extended rally on Wall Street comes following the release of a report from the Labor Department showing consumer prices in the U.S. inched up by less than expected in the month of November.

The Labor Department said its consumer price index crept up by 0.1 percent in November after climbing by 0.4 percent in October. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices edged up by 0.2 percent in November after rising by 0.3 percent in October. Core prices were expected to show another 0.3 percent increase.

The report also showed the annual rate of growth by consumer prices slowed to 7.1 percent in November from 7.7 percent in October.

The year-over-year increase in November, which came in below economist estimates for a slowdown to 7.3 percent, reflects the slowest annual growth since December 2021.

The annual rate of growth by core consumer prices also slowed to 6.0 percent in November from 6.3 percent in October, while economists had expected price growth to slow to 6.1 percent.

The tamer-than-expected inflation data is likely to ease concerns about the outlook for interest rates ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is still likely to raise interest rate by another 50 basis points, but the slower price growth may offset recent worries about future rate hikes.

Gold stocks have shown a substantial move to the upside on the day, resulting in a 3.4 percent spike by the NYSE Arca Gold Bugs Index.

The rally by gold stocks comes amid a sharp increase by the price of the precious metal, with gold for February delivery soaring $37.90 to $1,830.20.

Significant strength has also emerged among semiconductor stocks, as reflected by the 3.3 percent surge by the Philadelphia Semiconductor Index. The index has reached its best intraday level in well over three months.

Housing stocks are also turning in a strong performance on the day, driving the Philadelphia Housing Sector Index up by 3.1 percent to an eight-month intraday high.

Biotechnology, oil service and commercial real estate stocks are also seeing considerable strength, moving higher along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan’s Nikkei 225 Index rose by 0.4 percent, while China’s Shanghai Composite Index edged down by 0.1 percent.

Meanwhile, the major European markets have all shown strong moves to the upside on the day. While the U.K.’s FTSE 100 Index has jumped by 1.4 percent, the French CAC 40 Index and the German DAX Index are both up by 2.4 percent.

In the bond market, treasuries have moved sharply higher following the tamer-than-expected inflation data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 15.9 basis points at 3.452 percent.

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