Wall Street hits its highest level since early 2022 following inflation report

NEW YORK

Wall Street rose to its best level in nearly 23 months, just a bit below its record high, after a report on Tuesday showed inflation in the United States is behaving mostly as expected.

The S&P 500 climbed 21.26 points (0.5%) to 4,643.70 to sit just 3.2% below its all-time high set at the start of last year. The Dow Jones Industrial Average rose 173.01 (0.5%) to 36,577.94. The Nasdaq composite gained 100.91 (0.7%) to 14,533.40. The Russell 2000 lost 2.41 (0.1%) to 1,881.27.

Big Tech stocks helped lead the way following solid gains for Nvidia, Meta Platforms and some other of Wall Street’s largest and most influential stocks. They overshadowed a 12.4% tumble for Oracle, whose revenue for the latest quarter fell short of analysts’ forecasts.

But Wall Street’s spotlight was on the inflation report, which showed U.S. consumers paid prices for gasoline, food and other living costs that were 3.1% higher overall last month than a year earlier. That was a slight deceleration from October’s 3.2% inflation and exactly in line with economists’ expectations.

The data likely changes nothing about what the Federal Reserve will do at its latest interest-rate meeting, which ends Wednesday. The widespread expectation is still for the Fed to keep its main interest rate steady.

The Fed has already yanked its main interest rate from virtually zero early last year to more than 5.25%, its highest level since 2001. It’s hoping to slow the economy and hurt investment prices by exactly the right amount: enough to stamp out high inflation but not so much that it causes a steep recession.

Recently rising hopes that the Fed can manage such an “immaculate” landing for the economy have helped stocks to rally and bets to rise that the Fed’s next move on interest rates will be to cut sometime in 2024, perhaps as early as March.

Cuts to interest rates can juice prices for stocks and other investments, while offering more oxygen for the overall economy and financial system.