U.S. stocks roared higher Thursday after October’s consumer-price index showed inflation rising at a less aggressive annual pace than expected, spurring hopes that the Federal Reserve’s inflation flight may be finally making some headway.
But it’s probably still remains too early to rush into battered stocks, because the U.S. economy is “less sensitive to a blunt instrument like interest rate hikes,” than in the past, warned analysts at BofA Global, in a weekly client note. What’s more, corporations also raised a lot of low-cost fixed-rate funding during the pandemic and the economy is now driven by the services sector, which is less sensitive to interest rate rises than the manufactured goods sector.
While the team’s report came ahead of Thursday’s fresh inflation reading, its warnings were echoed elsewhere on Wall Street after the CPI report, with analysts and policy makers reiterating that the Federal Reserve’s inflation fight likely remains far from over.
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