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U.S. stocks rose as traders took in slightly damper inflation data.
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Consumer prices rose 3.4% in April from a year earlier, slowing from the previous month’s 3.5% rise.
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Still, investors are dampening expectations that the Fed will cut interest rates before the end of the year.
U.S. stocks soared Wednesday as traders took in the latest inflation report showing prices cooled slightly in April.
Major averages rose as bond yields fell. The 10-year Treasury bond fell 7 basis points to 4.369%.
Last month’s consumer price inflation rate was 0.3%, lower than the expected 0.4%. Compared to the same month last year, the price increase rate in April was 3.4%, slower than the previous month’s annual rate of increase of 3.5%.
Falling inflation has raised some expectations that the Federal Reserve will cut interest rates several times this year, making them bullish on stocks. But investors have largely accepted that rates will remain high for an extended period of time, with markets expecting one to three rate cuts by the end of the year, according to the CME FedWatch tool.
“The first downside surprise in inflation since the start of the year should allay nagging concerns that inflation is starting to trend upwards again, which will be welcomed by markets given that a 2024 Fed rate cut is once again on the table.” ” Seema Shah, chief global strategist at Principal Asset Management, said in a note on Wednesday.
Still, the Fed is mostly expected to keep interest rates steady at its next policy meeting. Traders see a 92% chance for June to remain between 5.25% and 5.5%.
Sonu Varghese, global macro strategist at Carson Group, said of the latest inflation data: “The Fed is keeping policy where it is, with no interest rate cuts until September at the earliest, and the chances of a rate hike becoming even slimmer. “
Here are the U.S. indexes as of the 9:30 a.m. opening bell Wednesday:
Here’s what else is happening today:
In Commodities, Fixed Income and Cryptocurrencies:
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West Texas Intermediate crude oil fell 0.91% to $77.31 per barrel. The international benchmark Brent crude oil fell 0.95% to $81.61 per barrel.
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Gold rose 0.49% to $2,369 an ounce.
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The yield on the 10-year Treasury note fell 7 basis points to 4.369%.
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Bitcoin rose 4% to $64,496.
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