By
Steve Muchoki
April 16th, 2024
The data has sent a positive signal to investors that inflation in the US has peaked, a good development for the broader economy.
The once-hot inflation in the United States has shown signs of cooling following the latest Consumer Price Index (CPI) data released today by the United States Bureau of Labor Statistics (BLS). According to the figures published, the CPI which is a measure of the prices of goods and services soared by 0.4% for October and by 7.7% when compared to the year-ago period.
This data is highly impressive when compared to the 8.2% recorded for September and the 7.9% projected by analysts polled by Dow Jones.
“It certainly shows how much the markets been keyed about, worried about, and wants to run on CPI if you get any sort of help here,” said John Briggs of NatWest. “It just brings up the idea of peak inflation, peak Fed…The Fed will slow and peak rather than continue to aggressively hike at 75 basis points as at a time.”
The data has sent a positive signal to investors that inflation in the US has peaked, a good development for the broader economy. This fueled impressive growth in the stock market as the futures tied to the Dow Jones Industrial Average (INDEXDJX: .DJI) rose 844 points atop a 2.6% growth. Futures tied S&P 500 (INDEXSP: .INX) jumped 3%, while Nasdaq 100 futures also recorded a growth of over 3.7%.
The inflationary update and the response of the Federal Reserve have kept the market down to a very large extent as access to credits to foster business growth was significantly stiffened. Journeying from the Pre-Market, a good number of tech stocks are seeing notable upshots in the early hours of trading Thursday.
Meta Platforms Inc (NASDAQ: META) is trading up 5.6% to $107.16 despite the firm announcing a 13% job cut of 11,000 of its employees earlier this week. Bitcoin (BTC), and Ethereum (ETH) are also leading the crypto market uptrend following the news.
While Bitcoin has pared its losses to trade at $17,521.29, Ethereum is up by 8.46% to $1,331.05 at the time of writing.
US Inflation and Prospective Response from the Feds
With the inflation figure in the US coming at an impressively lower figure, analysts are projecting that the Federal Reserve Open Market Committee (FOMC) will no longer maintain its flagship 75 basis points interest rate hike moving forward.
“Now the question is what we hear from the Fed. That will determine how far the rally can extend. A single data point is not enough to make that assertion entirely, but it adds to that case [for peak inflation],” said Ben Jeffery at BMO.
As it stands, the Federal Reserve officials including Chairman Jerome Powell have reiterated that it will continue to fight inflation until it is down to the 2 to 4% benchmark. The figures show this milestone is still far away and investors need to keep an open mind about what to expect from the economic drivers in their next meeting.