Hope of inflation ‘peak’ spurs rally
A robust, broad-based rally sent Wall Street stocks surging on Friday, as encouraging economic data and a rosier earnings outlook buoyed investor risk appetite ahead of next week’s much-anticipated two-day policy meeting of the Federal Reserve.
The Dow Jones Industrial Average rose by more than 800 points while the Nasdaq rallied more than 300 points. The S&P 500 ended the day up more than 2%.
The rally led to a fourth straight week of gains, pushing the Dow to nearly 33,000, up 14% for the month.
Experts credited the optimism to a key economic data point that showed inflation could be peaking and there may be light at the end of the tunnel.
The core Personal Consumption Expenditures price index, which is closely followed by the Federal Reserve, showed that inflation remained strong in September, but stayed mostly within expectations, the Bureau of Economic Analysis reported on Friday.
PCE inflation rose 0.3% for September and 6.2% on a yearly basis — the same figures that were recorded in August.
Forrest McCall, a finance expert and owner of the financial site Don’t Work Another Day, told The Post the PCE figure was “in line with expectations and helped to tame fears of ongoing hot inflation.”
“Investors are hoping for a final 75-basispoint hike before the Fed eases off the gas pedal and slows further rate-hiking,” McCall told The Post.
The Fed is expected to deliver another jumbo-sized 75-basis-point increase when it meets next week. For December, traders are largely expecting a 50-basispoint increase.
Guido Petrelli, CEO and founder of Merlin Investor, told The Post that “it seems like the market is rebuilding trust” after disappointing tech earnings.
“Technology companies have been those which have been beaten the most, but even if below expectations, they still continue to keep good revenues and high cash reserves,” Petrelli said.