Business Maverick: Stocks skyrocket in best post-CPI day on record: markets wrap

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Stocks surged in a buy-everything relief rally after slower-than-projected price growth spurred bets the Federal Reserve can downshift its aggressive rate-hike path.

The S&P 500 climbed 5.5% for the best first-day reaction to a CPI report since at least 2003 when records began. About 96% of stocks in the benchmark were in the green, the broadest advance since 4 October, according to Bloomberg data. The rally caught short-sellers wrong-footed, helping spur the outsized gains. Crypto marketsHeadline inflation came in at 7.7%, the lowest since January, before Russia’s war in Ukraine pushed up commodity prices.

Treasuries soared, sending the rate on two-year notes, more sensitive to monetary policy, down 25 basis points. Rates traders downgraded the odds of another three-quarter-point rate increase in December almost to nil, while continuing to price in a half-point hike. The Bloomberg dollar index sank 2%.

Dallas Fed president Lorie Logan said it may soon be appropriate to slow the pace to better assess economic conditions. San Francisco’s Mary Daly said the moderation was “good news,” but noted “pausing is not the discussion, the discussion is stepping down”.

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