Stocks Rally as Inflation Data Cements View the Fed Is Done Raising Rates
Stocks soared on Tuesday, after an inflation reading raised hopes that the Federal Reserve’s campaign to slow inflation may have reached its limits.
The S&P 500 rose 1.9 percent on Tuesday, while the Russell 2000 index of smaller companies’ stocks, which are more exposed to the ups and downs of the economy, climbed roughly 5 percent.
The stock gains reflected expectations that the Fed may not need to raise interest rates again, after new data showed consumer price inflation slowed in October. The central bank has been increasing borrowing costs since March of last year in an attempt to rein in economic activity and slow the pace of price increases.
The numbers came amid some debate in markets over whether the Fed will have to continue with that campaign — in particular amid signs of a still healthy labor market and other factors that could inhibit policymakers’ efforts to temper inflation. But Tuesday’s report helped cement a view in financial markets that the Fed’s efforts are working.
