Wall Street recorded one of the best days of the year after the positive report on US inflation

Workers work on the floor of the New York Stock Exchange (Reuters/Andrew Kelly)

Wall Street rose on Wednesday after a report indicated Inflation slowed more than expected last monthsparking speculation that the Federal Reserve It may not be necessary to be as aggressive in raising interest rates as feared.

At the closing bell, the indicator Dow Jones Technology gained 1.63% Nasdaq Strong 2.89% and Standard & Poor’s 500 2.13 percent.

Stocks closed at their highest in three months. Tech stocks, cryptocurrency, and other investments that are among the biggest losers of the year due to sharp increases in Federal interest rates led the gains.. Treasury yields fell sharply on the back of inflation data as traders lowered their bets on how much the Federal Reserve will raise interest rates at its meeting next month.

Much of the slowdown in inflation in July was due toto lower gasoline and oil prices. But even after ignoring that and the volatility of food prices, the so-calledCore inflation“stayed Fixed Last month, rather than accelerating as economists expected.

The data encouraged traders to cut bets on how much the Federal Reserve will raise interest rates at its next meeting. And they now see a half-percentage-point rise as the most likely outcome, according to CME Group. The day before, they were betting on a more powerful rise in 0.75 percentage pointJust like the last two uploads.

These differences may not seem significant, But interest rates help determine the direction of prices in the financial markets. Higher rates tend to drive down the prices of everything from stocks to commodities to cryptocurrencies.

Bond prices rose immediately after the release of the inflation report, which lowered bond yields. And theThe two-year Treasury yield, which tends to follow the Fed’s expectations, fell to 3.14% from 3.27% on Tuesday.

10-year yield fell slowerto 2.76% from 2.78%, narrowing the gap to a two-year yield. Many investors consider this gap a fairly reliable sign of the upcoming recession.

Recession fears have grown as 40-year high inflation puts pressure on households and businesses around the world. The Federal Reserve and other central banks have raised interest rates to slow the economy in hopes of curbing inflation, but they risk stifling it if they act too aggressively.

“The road they’re trying to cut is the edge of the razor.”said Brian Nick, chief investment strategist at Nuveen.

To be sure, inflation remains painfully high, and is expected to remain so for some time to come. However, Wednesday’s data renewed Wall Street, Which faltered after a stronger-than-expected jobs report on Friday, which further increased the Fed’s outlook more aggressively. It raised hopes that higher inflation – and thus further interest rate hikes by the Federal Reserve – might be on the horizon.

“It is a step in the right direction. “But keep in mind that we have many miles to go before inflation returns to normal,” said Mike Lowengart, managing director of e-commerce investment strategy at Morgan Stanley.

The Federal Reserve will receive other highly anticipated reports before the next interest rate announcement on September 21, which may change your position as well. Among them are reports outlining employment trends across the economy, which will be released on September 2, and the next update on consumer inflation, which will be released on September 13.

Immediately, this week’s reports will show inflation developments at the wholesale level and whether US households continue to lower inflation expectations, a moving piece of information for Fed officials.

however, Inflation data released on Wednesday helped stocks across Europe rise with modest gains, while earlier markets closer in Asia were mostly lower. Germany’s DAX fell 1.2%, Japan’s Nikkei 225 fell 0.6% and Hong Kong’s Hang Seng fell 2%.

(With information from AP and AFP)

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Year-on-year inflation in the US fell to 8.5% in July after lower energy prices

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