Stock market jumps on weaker-than-expected inflation, driven by consumer discretionary and tech stocks

Stock market jumps on weaker-than-expected inflation, driven by consumer discretionary and tech stocks

The stock market soared on Thursday, led by the Nasdaq, after inflation came in at a lower-than-expected annual rate of 7.7%. Consumer discretionary and technology stocks led the charge. Amazon (AMZN), up more than 12%, and Apple (AAPL), up 6%, were among blue chip stocks that soared.


The Nasdaq composite jumped 6.2%. The Dow Jones Industrial Average rose 3.1% and the S&P 500 gained 4.6%. The Russell 2000 Small Cap Index gained 5.8%.

The Nasdaq is on course for its best all-time CPI day performance (since the inception of the Nasdaq Composite Index).

Volume increased on both the NYSE and Nasdaq from the same time on Wednesday.

The yield on the benchmark 10-year Treasury note plunged nearly 30 basis points to 3.85%. Crude oil prices rose 1% to $86.80 a barrel.

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

Stock market jumps on low inflation

The Labor Department’s consumer price index (CPI) rose 0.4% in October, below estimates that called for a 0.7% rise from the previous month. Consumer inflation rose 7.7% year-on-year, lower than the forecast increase of 8% and lower than the annual inflation rate of 8.2% last month . Core prices increased by 6.3%. Consumer prices and underlying prices were below economists’ expectations.

Meanwhile, the first unemployment claims also came out at 8:30 a.m. ET. Initial claims rose to 225,000 from 217,000 the previous week.

After the inflation figures were released, the odds of the Fed raising rates by 0.5% jumped to 80.6%, while the odds of a 75 basis point hike fell to 19.4 %, according to the CME tool FedWatch.

“Markets are applauding lower inflation. Expectations of a rate cut (started) with expectations of a rate hike (on Dec. 14) anchored at 50 basis points,” said Quincy Krosby, Chief Global Strategist for LPL Financial.

But John Lynch, chief investment officer of Comerica Wealth Management, warned that investors may react too optimistically to easing headline inflation. “We believe this is yet another triumph of hope over reality. Sustained pressures on housing, wage and energy prices point to a protracted fight against inflation. Indeed, Fed Chairman Jerome Powell said in no uncertain terms last week that rates will stay higher for longer.”

Meanwhile, investors seemed to have already forgotten about Tuesday’s midterm elections, which showed the Republican Party had likely taken control of the House, but control of the Senate was still undecided.

Electric vehicle stocks soar on earnings, Tesla follows

Actions of the electric vehicle manufacturer Rivian Automotive (RIVN) climbed more than 17% after beating earnings views but narrowly missed analysts’ sales estimates.

Chinese electric vehicle start-up Nio (NIO) reported mixed third quarter results on Thursday. He also gave conservative advice in the wake of Covid-related production restrictions. Nio shares jumped 11% after falling to a near two-year low on Wednesday.

Electric vehicle giant You’re here (TSLA) rose 6.2% on Thursday as it attempts to snap a four-day losing streak.

Big Pharma stock Astra Zeneca (AZN) jumped more than 6% on Thursday after reporting third-quarter earnings and sales that beat estimates. AZN shares are forming a cut base with a buy point of 68.36.

Shares of True (VERU) collapsed on Thursday after Food and Drug Administration advisers voted against the company’s cancer treatment turned Covid.

IBD 50 soars, led by WingStop

Financial software developer Just Isaac (FICO) climbed more than 23% after reporting fiscal fourth-quarter results that beat analysts’ estimates. FICO was well past its buy point of 508.09 from a cup with handle.

Manufacturer of outdoor products Yeti (YETI) jumped nearly 30% after reporting earnings and sales results that beat analysts’ estimates on Thursday. The stock is still well below its high of 108.82 on November 5, 2021.

amusement park operator six flags (SIX) jumped more than 15% after amending its existing cooperation agreement to allow H Partners to increase its beneficial ownership of Six Flags common stock to 19.9%.

ETF Innovator IBD 50 (FFTY) gained 3.3%, led by Medpace (MEDP), Chemical and mining company (m²) and wing stop (WING). WING stock jumped more than 6%, extending the rally in junk food stocks and breaking out of its buy zone.

Follow Michael Molinski on Twitter @IMmolinski


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