By
Steve Muchoki
April 16th, 2024
Futures of the S&P 500 and other major indexes inch upward following a very impressive single-day rally spurring general increases.
Stock futures climbed on Friday, November 11th, following the largest single-day rally by the S&P 500 since 2020. The stock futures development also came about after China announced that it would ease some Covid restrictions, including trimming quarantine time by two days.
The significant S&P 500 rally is attributable to renewed optimism from lighter-than-anticipated inflation data. This development sparked a broad market rally during the previous session, which also saw a climb in futures tied to the other major indexes. In addition to S&P futures inching upward by 0.5%, Nasdaq 100 futures also increased by 0.7%. Furthermore, futures tied to the Dow Jones Industrial Average grew 0.5%, or by an additional 152 points.
Rise in Stock Futures Rise Also Comes with Rally by S&P 500, Dow, and Nasdaq
Alongside the positive upside to their respective futures, all three major indexes recorded their biggest one-day rallies in two years. For instance, the S&P 500 increased 5.5%, with the Dow Jones climbing more than 1,200 points. Additionally, the tech-laden Nasdaq Composite rallied by about 7.4%.
These upsides put all three major indexes comfortably on course to close the week in the green. As it stands, the S&P is up 4.9% weekly, while the Dow Jones is up 4% by the same metrics. In addition, the Nasdaq is also on course for a winning week with a commendable 6.1% increase.
By extension, the three major indexes are also on course for a positive month.
October CPI Report
Investors received fresh hope that inflation may be tapering after October’s consumer prices by the Bureau of Labor Statistics came in less than expected. This positive development also led to a decline in US Treasury yields while inversely triggering a rally in tech stocks. Commenting on the situation, chief global strategist for LPL Financial, Quincy Krosby, offered:
“Markets across the board are euphoric following the cooler CPI this morning… But today’s CPI report, while indicating that inflation is moving in the right direction, does not suggest that inflation has been rooted out of the broader economy. And it does not suggest that Fed’s job to restore price stability is complete.”
Michael Arone, chief investment strategist at State Street Global Advisors, described the latest inflation trend as a welcome development. However, he also suggested that investors err on the side of caution and remain vigilant.
Meanwhile, San Francisco Fed President Mary Daly took a more cynical approach to the latest CPI report. As she put it:
“One month of data does not a victory make, and I think it’s really important to be thoughtful that this is just one piece of positive information, but we’re looking at a whole set of information… We have to be resolute to bring inflation down to 2% on average.”
Daly further stated that the goal is to continue to adjust policy until the inflation level goal is achieved.”
The October CPI data shows an increase of 0.4% from the preceding month and a 7.7% increase year-over-year (YoY).