Stock Market Soars On Lower Inflation Rate, Led By Nasdaq, Consumer Discretionary, Tech Stocks

The stock market rose on Thursday, led by the Nasdaq, after inflation fell to a lower-than-expected 7.7% annual rate. Consumer and technology companies led the way. Amazon (AMZN), more than 12%, and The night ( AAPL ), up 6 percent, were among the blue-chip stocks that rose.




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The Nasdaq composite rose 6.2 percent. The Dow Jones Industrial Average rose 3.1%, and the S&P 500 rose 4.6%. The small-cap Russell 2000 index rose 5.8 percent.

The Nasdaq is on pace for its best CPI release day performance on record (since the inception of the Nasdaq composite index).

Volume on the NYSE and Nasdaq also rose on Wednesday.

The yield on the benchmark 10-year Treasury note fell about 30 basis points to 3.85%. The price of crude oil increased by 1 percent and reached 86.80 dollars.

The S&P Consumer Discretionary ETF ( XLY ) led all sectors, up 7 percent, followed by the S&P Technology Sector Select ETF ( XLK ), up 6.4 percent.

Stock Market Declines on Inflation

The Labor Department’s consumer price index (CPI) rose 0.4 percent in October, beating expectations for a 0.7 percent increase last month. Consumer inflation rose 7.7% year-on-year, which was less than the expected 8% increase and lower than last month’s annual inflation rate of 8.2%. Basic prices increased by 6.3%. Both consumer prices and core prices were lower than economists had expected.

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Meanwhile, first jobless claims also came out at 8:30 am ET. Initial claims rose to 225,000 versus 217,000 last week.

After the inflation numbers were released, the probability that the Fed would raise rates by 0.5 percent rose to 80.6%, while the odds of a 75-basis-point hike fell to 19.4%, according to the CME FedWatch tool.

“Markets are applauding the cooler inflation print. Expectations for a rate cut (Dec. 14) have been offset by expectations for a rate hike (Dec. 14) that have settled at 50 basis points,” said Quincy Krosby, chief global strategist for LPL. Financial.

But John Lynch, chief investment officer of Comerica Wealth Management, cautioned that investors may be overreacting to easing core inflation. “We believe this is another triumph of hope over reality. Continued price pressures in housing, wages and energy reflect a long-term battle against inflation. Indeed, Fed Chairman Jerome Powell was vague in his comments last week that rates will remain for a longer period of time.”

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Meanwhile, investors appeared to have already forgotten Tuesday’s midterm elections, which showed the Republican Party likely to have won control of the House but that control of the Senate was still undecided.

EV Stocks Rise on Earnings, Tesla Follows

Electric vehicle manufacturer shares Rivian Automotive ( RIVN ) rose 17 percent after beating earnings views, but fell short of analysts’ sales estimates.

The beginning of the Chinese EV No ( NIO ) reported mixed third quarter earnings results on Thursday morning. It also gave conservative guidance on Covid production thresholds. Nio stock jumped 11 percent after falling to near two-year lows on Wednesday.

Giant Electric-vehicle Tesla ( TSLA ) traded up 6.2% on Thursday as it tries to end a four-day losing streak.

Big Pharma stock AstraZeneca (AZN) rose more than 6% on Thursday after reporting Q3 earnings and sales that came in line with estimates. AZN shares are forming a bullish base with a buy point of 68.36.

Shares from Veru ( VERU ) collapsed Thursday after Food and Drug Administration advisers voted against the company’s drug-turned-Covid cancer treatment.

IBD 50 Soars, Powered by WingStop

Financial software developer Fair Isaac ( FICO ) surged more than 23% after reporting fiscal fourth-quarter earnings that beat analysts’ estimates. FICO was well above its 508.09 buy point from the bullpen.

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Manufacturer of outdoor products Yeti ( YETI ) jumped nearly 30% after reporting early earnings Thursday that beat analysts’ estimates for both revenue and sales. The stock is still below its November 5, 2021 peak of 108.82.

Amusement park operator Six Flags (SIX) after amending the existing partnership agreement to 15% to allow H Partners to increase its beneficial ownership of the Six Flags joint venture to 19.9%.

The Innovator IBD 50 ETF ( FFTY ) gained 3.3 percent, led by guidance Medpace (MEDP), Sociedad Quimica Y Minera (SQM) and Wingstop (BASK). WING stock fell more than 6%, extending a rally in junk food stocks and turning into buying territory.

Follow Michael Molinski on Twitter @IMmolinski

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