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US stocks jump as inflation shows signs of easing


US stocks rose on Wednesday, eyeing fresh record highs as a soft reading on consumer prices fueled hopes that the Federal Reserve could cut interest rates sooner than expected.

The S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) jumped about 0.4% at the open. The tech-heavy Nasdaq Composite (^IXIC) climbed about 0.5%, after hitting a record close on Tuesday.

The Consumer Price Index rose 0.3% over the previous month and 3.4% over the prior year in April, a deceleration from March. “Core” inflation — which strips out the cost of food and gas — grew at its slowest annual pace of 2024.

Stocks have ground higher amid rekindled confidence that the US economy is in good enough shape for the Federal Reserve to start bringing interest rates down from their current historic highs. That optimism has fueled a resurgence in bullishness in the market.

Elsewhere on the macroeconomic front, retail sales fell flat — exactly — last month, coming in well short of Wall Street’s expectations.

Read more: How does the labor market affect inflation?

Meanwhile, the pace slackened in the frenzied meme-stock rally that saw GameStop (GME) and AMC (AMC) prices more than double at one point on Tuesday. Both stocks dropped more than 10% at the open on Wednesday.

Live4 updates

  • Stocks head for record after soft inflation, retail sales print

    US stocks rose on Wednesday, eyeing fresh record highs as a soft reading on consumer prices fueled hopes that the Federal Reserve could cut interest rates sooner than expected.

    The S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) jumped about 0.4% at the open.The tech-heavy Nasdaq Composite (^IXIC) climbed about 0.5%, after hitting a record close on Tuesday.

    Both the Nasdaq and S&P 500 were on track for record closes, if they maintained their gains throughout the trading session.

  • Retail sales flat in April, falling short of Wall Street’s expectations

    The US consumer showed signs of slowing in April.

    Retail sales were flat in the month, according to data from the Commerce Department, furthering concerns about the state of the consumer amid sticky inflation and higher interest rates.

    This marked a slowdown from the 0.6% month-over-month increase seen in March. Economists had expected a 0.4% increase in spending, according to Bloomberg data.

    Excluding autos and gas, retail sales declined by 0.1% last month; expectations had been for a 0.1% increase.

  • Inflation pressures ease in April

    US consumer price increases cooled during the month of April, according to the latest data from the Bureau of Labor Statistics released Wednesday morning.

    The Consumer Price Index (CPI) rose 0.3% over the previous month and 3.4% over the prior year in April, a slight deceleration from March’s 3.5% annual gain in prices and 0.4% month-over-month increase.

    April’s monthly increase came in lower than economist forecasts of a 0.4% uptick. The annual rise in prices matched estimates, according to data from Bloomberg.

    On a “core” basis, which strips out the more volatile costs of food and gas, prices in April climbed 0.3% over the prior month and 3.6% over last year — cooler than March’s data. Both measures met economist expectations.

  • Well, at least valuations aren’t too stretched

    As we witness GameStop (GME) up another 8% pre-market, it’s worth noting wild bubble moves like this aren’t spreading throughout the broader market.

    That could be captured in this nifty new valuation chart from Goldman Sachs this morning.

    Compelling valuations still out there?

    Compelling valuations still out there? (Goldman Sachs)

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