Wall Street closes with gains after inflation data in the United States

US stocks rose on Tuesday after a smaller-than-expected rise in consumer prices injected some optimism as the Federal Reserve (Fed) may soon slow its pace of interest rate hikes to tame inflation, but concerns remain that the Central Reserve could remain aggressive.

benchmark S&P 500 rose as much as 2.76% in the session, hitting a three-month high, after reports that US consumer prices for November rose barely as the cost of gasoline and used cars fell, marking the smallest annual gain of inflation in almost a year, standing at 7.1%.

The data supported expectations of lower and slower rate hikes from the Federal Reserve helped raise indices sensitive to the cost of credit, with the growth index S&P 500 and the real estate S&P 500 to raise.

Fed funds futures prices implied that the probability that the Federal Reserve raise interest rates this week half a point are discounted, with increases of less than 25 basis points for their first two meetings of 2023, and without reaching 5% in March.

Ellen Zentner, Morgan Stanley’s chief US economist, now sees even smaller Fed rate hikes, 25 basis points at the February meeting, and none in March, leaving the top Fed funds rate at 4.625. %.

The Fed’s monetary policy committee will meet on Wednesday and is expected to announce a 50 basis point rate hike.

“There was some excitement at first that the CPI number once again came in below expectations, showing some cooling afterwards, but once we saw that initial rally, investors reassessed the stock,” said Jason Ware, chief investment officer. of Albion Financial Group.

“That probably took some of the steam out of the markets once investors realized that tomorrow could very well be (Fed Chairman) Jerome Powell throwing cold water on today’s rally.”

The S&P 500 gained 29.09 points, or 0.73%, to 4,019.65 units, while the Nasdaq Composite it rose 111.56 points, or 1.00%, to 11,256.81 points. The Dow Jones Industrial Average it rose 103.60 points, or 0.30%, to 34,108.60.

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