• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Blog Home
  • Topics
    • Keystone Press Releases
    • Politics and Government
    • Legislation
    • Nevada News
    • Tourism & Gaming
    • Rural Nevada
    • Business
    • Opinion
  • Membership
  • Contact Us
  • About Keystone Nevada

Keystone Nevada Korner

Welcome to The Keystone Korner The Official Blog of Keystone Nevada

Home » Dow up 1,200 points on cooling inflation reports

Dow up 1,200 points on cooling inflation reports

November 13, 2022 by Pauline Lee

by Stan Choe, The Associate Press, November 10, 2022

NEW YORK — Wall Street blasted off Thursday to soar to its best day in more than two years as exhilaration swept through markets after a report showed inflation in the United States eased last month by even more than expected.

The S&P 500 surged 5.5%, while the Dow Jones Industrial Average leaped 1,200 points and the Nasdaq composite packed what could be a year’s worth of gains into one day by roaring 7.4% higher.

Prices jumped for everything from metals to European stocks as investors took the data as a sign that the worst of high inflation may finally be behind us, though analysts cautioned it’s still premature to declare victory. Even bitcoin rose to claw back some of its steep plunge from prior days caused by the crypto industry’s latest crisis of confidence.

Some of the most dramatic action was in the bond market, where Treasury yields tumbled sharply as investors pared bets for how aggressive the Federal Reserve will be in hiking interest rates to get inflation under control. Such hikes have been the main reason for Wall Street’s struggles this year and are threatening a recession.

The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, fell to 3.82% from 4.15%. It’s a dramatic move for the bond market, and the yield was on track for its biggest daily drop since 2009, according to Tradeweb. The two-year yield, which more closely tracks expectations for Fed action, fell to 4.32% from 4.62% and was on pace for its sharpest fall since 2008.

All the action stemmed from a U.S. government report showing that inflation slowed in October for a fourth straight month since hitting a peak of 9.1% in June. The reading of 7.7% was better than the 8% economists were expecting.

Perhaps more importantly, inflation also slowed more than expected after ignoring the effects of food and energy prices. That’s the measure the Fed pays closer attention to. So did inflation between September and October.

“The month-on-month rate of inflation is much more informative,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments. “On that measure, inflation is still high, but not scary high.”

Slower inflation could keep the Fed off the most aggressive path in raising interest rates. It’s already raised its key rate to a range of 3.75% to 4%, up from virtually zero in March.

By raising rates, the Fed is intentionally trying to slow the economy and jobs market in hopes of undercutting inflation, which hit a four-decade high in the summer. The risk is that it can create a recession if it goes too far, and higher rates drag down on prices for stocks and other investments in the meantime.

Higher rates have particularly hit high-growth tech stocks, cryptocurrencies and other investments seen as the riskiest or most expensive.

Big Tech stocks were some of the most buoyant forces on Wall Street following the inflation report. Apple rose 8.9%, Microsoft climbed 8.2% and Amazon soared 12.2%.

The Nasdaq composite, which is full of tech-oriented stocks, soared to its best day since March 2020, when Wall Street was in the midst of its frenzied recovery from the crash caused by the coronavirus. The broader S&P 500, which sits at the heart of many 401(k) accounts, had its best day since April 2020.

The S&P 500 climbed 207.80 points to 3,956.37. The Dow gained 1,201.43, or 3.7%, to 33,715.37, and the Nasdaq shot up 760.97, or 7.4%, to 11,114.15.

Homebuilders and other companies in the housing industry were also strong on hopes the Fed will take it easier on rate hikes that have already sent mortgage rates to industry-punishing levels. PulteGroup jumped 13.5%, and Lennar rose 12.6% for some of the bigger gains in the S&P 500.

Slower inflation could get the Federal Reserve to downshift the size of its rate hikes at its next policy meeting in December, after it pushed through four straight mega increases of 0.75 percentage points. That could open the way for the Fed to return to the more typical increases of 0.25 percentage points before pausing hikes completely.

Following Thursday’s inflation report, traders increasingly shifted into bets for the Fed to raise rates by only 0.50 percentage points next month, instead of a bigger hike.

While Thursday’s report on inflation was encouraging, analysts cautioned the Fed’s campaign against high inflation is likely still far from over. Inflation data has also given false hope before, only to reaccelerate again.

“The Fed was adamant that it won’t hit the brakes on rate hikes until inflation slows, and while the market’s rally indicates investors may see light at the end of the tunnel, it will get one more reading before its decision next month,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. “Remember that even as we see a slowdown, prices remain elevated and have a long way to go before normalizing.”

Another potentially market-shaking report will hit Wall Street Friday, when the latest reading arrives on how much inflation U.S. households see coming in future years. Fed Chair Jerome Powell has said he’s paying particularly close attention to such expectations.

One of the reasons the Fed has been so aggressive about hiking rates is because it wants avoid a debilitating cycle where expectations for high inflation push people to change their behaviors in ways that lead to even higher inflation.

AP Business Writers Joe McDonald, Matt Ott and Tom Krisher contributed.

Filed Under: Business Tagged With: Dow Jones Industrial Average, inflation, Morgan Stanley Global Investment Office

Primary Sidebar

Connect with Us

  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
Bootleg Bistro
Bootleg Bistro Ad
SLLC_Keystone_Blog-Ad_300x500_10%-Off-Repairs_05.19.21
CIOServices Ad 300x500-100
BRH Keystone Ad JPEG
Willow_Manor
Keystone Corporation Nevada

News Topics

  • Keystone Press Releases
  • Politics and Government
  • Legislation
  • Nevada News
  • Tourism & Gaming
  • Rural Nevada
  • Business
  • Opinion

Rural Nevada

Winnemucca braces for massive lithium mine

September 18, 2023 By Courtney Holland

By Ray Hagar, Nevada Newsmakers, September 18, 2023 Winnemucca, a town of more than 8,600 residents off Interstate 80 in Northern Nevada, is proud … [Read More...] about Winnemucca braces for massive lithium mine

Weather may have slowed January sales

April 8, 2023 By Courtney Holland

By The Record Courier Staff, April 4, 2023 For the third month in a row, Douglas County merchants reported a decrease in taxable sales, though not … [Read More...] about Weather may have slowed January sales

30 new projects in Pahrump: Arby’s, Chipotle, Midas Muffler, 3 convenient stores & more

March 29, 2023 By Courtney Holland

By Robin Hebrock, Pahrump Valley Times, March 28, 2023 Business is booming in the Pahrump Valley, with dozens of new companies looking to bring … [Read More...] about 30 new projects in Pahrump: Arby’s, Chipotle, Midas Muffler, 3 convenient stores & more

UPS and AVK America plan to expand in Douglas County

March 19, 2023 By Courtney Holland

Staff Reports for The Record Courier, March 17, 2023 United Parcel Service plans to build a new 168,000 square foot building in Douglas County, … [Read More...] about UPS and AVK America plan to expand in Douglas County

Opinion

EDITORIAL: Never Never Land for California regulators

September 25, 2023 By Courtney Holland

By the Las Vegas Review-Journal Editorial Board, September 24, 2023 It’s shocking, but California’s efforts to force-feed electric vehicles to its … [Read More...] about EDITORIAL: Never Never Land for California regulators

OPINION: American mining needs Gen Z

September 25, 2023 By Courtney Holland

By Rich Nolan, Reno Gazette Journal, September 18, 2023 By 2030, Gen Z will be 30 percent of the American workforce. This tech-savvy generation has … [Read More...] about OPINION: American mining needs Gen Z

OPINION: DExit to the desert: Why I left Delaware for Nevada

September 25, 2023 By Courtney Holland

By Phil Shawn, The Nevada Independent, September 15th, 2023 Some 80 years ago, visionaries saw a dusty military outpost in the middle of the Nevada … [Read More...] about OPINION: DExit to the desert: Why I left Delaware for Nevada

Tags

Adam Laxalt Biden Administration Business Business Columns Casinos & Gaming Catherine Cortez Masto Clark County Clark County School District economy Editorials Education Elon Musk employment Gov. Joe Lombardo Gov. Steve Sisolak Governor's Office of Economic Development (GOED) Housing inflation Inside Gaming Joe Lombardo las vegas Local Local Las Vegas Local Nevada mc-business mc-local mc-news mc-opinion Nevada News North Las Vegas NPRI Opinion Opinion Columns PAID Politics and Government Real Estate Insider Roe v. Wade school choice Sen. Catherine Cortez Masto small businesses Sports Tesla tourism Victor Joecks

Footer

Copyright © 2023 · Keystone Corporation - All Rights Reserved · Log in
Privacy Policy
By accessing this site, you are agreeing to our Terms of Use

The views, opinions and conclusions expressed by the authors of any article or post on the Keystone Korner are those of the author and do not necessarily reflect the opinions of Keystone Corporation or its officers and board members. Moreover, any reference to a person, party, product or entity does not constitute an endorsement or recommendation by Keystone Corporation or its officers and board members.