On Tuesday, Wall Street experienced a significant surge driven by lower-than-expected inflation figures, fueling speculation that the Federal Reserve could conclude its tightening cycle. This article delves into the key highlights of this market recovery, including the performance of major indices and individual stocks, trends in cryptocurrency and commodity markets, perspectives on copper and the dollar, and expectations regarding Fed policy. If you want to learn more about how unexpected turns in inflation data have reshaped the market landscape, read on.
The S&P 500 recorded a robust 1.9% growth, Dow Jones surged by 490 points, and Nasdaq rose by 2.4%. These results followed the release of October’s inflation data, where both overall and core indicators were lower than initial forecasts. This unexpected development eased concerns about an imminent interest rate hike, especially after Federal Reserve Chair Powell expressed uncertainty about the current measures’ effectiveness in reducing inflation to the targeted 2% level.
Nvidia made headlines, gaining 2% and reaching an all-time high of $496.16. This marked the company’s tenth consecutive session of growth, the longest winning streak since the end of 2016. Tesla also made waves, rising by 6.1% after announcing price increases for some cars in China.
Meta experienced a 2.1% gain following news of a partnership with Amazon , allowing users to directly purchase Amazon products through the social media platform. Amazon shares, in turn, rose by 2.2%. Home Depot joined the rally with an impressive 5.5% leap after surpassing quarter earnings expectations.
Bitcoin and Ether experienced a downturn, with Ether sliding by -2.24%. Notably, silver (3.51%), platinum (2.68%), and hot-rolled steel coils (0.97%) stood out as major commodity gainers. However, steel reinforcement mesh experienced a slight decline of -0.67%.
Meanwhile, copper futures reached $3.7 per pound in November, approaching levels last seen at the end of September. Factors such as a weakening dollar, rising demand expectations, and decreasing inventory levels influenced this climb.
The softer-than-expected results of the U.S. Consumer Price Index (CPI) for October played a crucial role in boosting copper prospects. The report alleviated concerns about further increases in Federal Reserve interest rates, leading to a decline in the value of the dollar.
Additionally, China’s decision to increase its budget deficit for manufacturing and infrastructure development, along with potential liquidity injections by the People’s Bank of China (PBoC), contributed to a positive copper sentiment. Shanghai Futures Exchange (SHFE) inventories decreased by 14% to 35,000 tons by November 10.
The dollar index experienced a 1.5% decline, reaching 104 points, the lowest level since the beginning of September. This drop followed CPI data indicating a slower-than-expected inflation pace in the U.S. Traders now attribute less than a 10% probability to the Fed raising its policy rate above the current 5.25%-5.50% range. The likelihood of a reduction in interest rates is increasing, with expectations for rate cuts beginning in May, as investors eagerly await upcoming data on U.S. producer inflation, retail sales, and insights from central bank officials later this week.
The unexpected twists in inflation data have reshaped the market landscape, inspiring optimism among investors. While Wall Street celebrates the alleviation of inflation fears, attention is now shifting to future economic indicators and central bank communications, which undoubtedly will continue to influence market dynamics in the coming weeks.
