Dow soars over 500 points as new data shows inflation continues to cool

Stocks rose on Tuesday as investors reacted positively to the latest economic data, which showed a slowdown in inflation for October. The Dow increased by 518 points, or 1.5%, while the S&P 500 and Nasdaq Composite gained 2% and 2.3% respectively, marking their best performance in several months. The Consumer Price Index (CPI) rose by 3.2% for the 12 months ending in October, down from 3.7% the previous month. The Core CPI, which excludes volatile categories like food and energy, increased by 0.2% month-over-month, resulting in an annual increase of 4%, the lowest since September 2021. Following the release of the data, Treasury yields fell, with the 10-year Treasury note yielding 4.46%. In addition to the CPI report, the October Producer Price Index, retail sales, building permits, and housing starts data are expected to be released this week. The Federal Reserve is anticipated to keep interest rates unchanged in December at its last policy-setting meeting of the year, as traders believe the current “wait-and-see” approach is justified by the CPI data. The stock rally on Tuesday followed a mixed performance on Monday, where investors appeared to overlook the negative outlook for US credit from Moody’s Investors Service. Home Depot also experienced a boost, with its shares rising 6.4% after outperforming revenue and earnings expectations and noting strength in small improvement jobs.