Deflating inflation spurs stock market

Exhilaration fills Wall Street as all 3 indexes enjoy banner day

NEW YORK — Wall Street blasted off Thursday to soar to its best day in more than two years as exhilaration swept through markets after a report showed inflation in the United States eased last month by even more than expected.

The S&P 500 surged 5.5 percent, while the Dow Jones Industrial Average leaped 1,200 points and the Nasdaq composite packed what could be a year’s worth of gains into one day by roaring 7.4 percent higher.

Prices jumped for everything from metals to European stocks as investors took the data as a sign that the worst of high inflation may finally have passed, though analysts cautioned it’s still premature to declare that with certainty. Even bitcoin rose to claw back some of its steep plunge from prior days caused by the crypto industry’s latest crisis of confidence.

Some of the most dramatic action was in the bond market, where Treasury yields tumbled sharply as investors pared bets for how aggressive the Federal Reserve will be in hiking interest rates to get inflation under control. Such hikes have been the main reason for Wall Street’s struggles this year and are threatening a recession.

The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, fell to 3.82 percent from 4.15 percent. It’s a dramatic move for the bond market, and the yield was on track for its biggest daily drop since 2009, according to Tradeweb.

The S&P 500 climbed 207.80 points to 3,956.37. The Dow gained 1,201.43, or 3.7 percent, to 33,715.37, and the Nasdaq shot up 760.97, or 7.4 percent, to 11,114.15.

All the action stemmed from a U.S. government report showing that inflation slowed in October for a fourth straight month since hitting a peak of 9.1 percent in June. The reading of 7.7 percent was better than the 8 percent economists were expecting.

Perhaps more importantly, inflation also slowed more than expected after ignoring the effects of food and energy prices. That’s the measure the Fed pays closer attention to. So did inflation between September and October.

“The month-on-month rate of inflation is much more informative,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments. “On that measure, inflation is still high, but not scary high.”