NEW YORK — Wall Street staged its biggest comeback in years Thursday, as stocks roared back from steep morning losses caused by a worse-than-expected report on inflation.
across the economy. One component that’s closely followed by policy makers and investors accelerated to its hottest level in 40 years. Smaller company stocks also rallied after an initial slide. The Russell 2000 rose 40.65 points, or 2.4%, to close at 1,728.41. Analysts said some data points buried deep within the inflation report may be offering hope that inflation is on its way to marking a peak and then easing, even though current conditions look dour. Others said technical reasons could also be helping to support markets, as some investors closed out of trades betting on declines following the inflation report.
But Thursday’s disappointing data caused some investors to expect a fifth such increase in December, dashing hopes that the Fed may begin downshifting soon. Bets increased for the Fed to pull its overnight rate above 5% by early next year. The federal funds rate started this year at virtually zero. “If you’re at least starting to see headline CPI cool, there’s hope that core CPI will follow,” Hooper said. “There’s definitely that thought process coming in.”
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