New York — The Nasdaq and S&P 500 surged more than 2% on Wednesday after data showed US inflation slowed more than expected in July and raised hopes the Federal Reserve will become less aggressive on interest rates hikes.
"For the market, it’s sort of a Goldilocks scenario right now because you have the labor market holding up and inflation potentially starting to come down. That is what a soft landing would look like," said Shawn Snyder, head of investment strategy at Citi US Wealth Management in New York. It was the biggest single-day gain for both the Nasdaq and S&P 500 in two weeks, and for the Dow in three weeks. It was the highest close for the S&P 500 since early May.
The slowing of inflation was the first"positive" reading on price pressures since the Fed began tightening policy, Chicago Fed President Charles Evans said, even as he signaled he believes the Fed has plenty more work to do.