The stock market soared 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, up more than 12%, and Apple, up 6%, were among the blue-chip stocks that shot up.
The Nasdaq composite jumped 6.2%. The Dow Jones Industrial Average rose 3.1%, and the S&P 500 gained 4.6%. The small-cap Russell 2000 index gained 5.8%.
The Nasdaq is on pace for its best CPI release-day performance on record (since the inception of the Nasdaq composite index).
Volume rose on both the NYSE and the Nasdaq vs. 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 per barrel.
The S&P Consumer Discretionary ETF led all sectors, up 7%, followed by the S&P Technology Select Sector ETF, up 6.4%.
Stock Market Jumps On Low Inflation
The Labor Department's consumer price index (CPI) rose 0.4% in October, cooler than estimates that expected a 0.7% rise vs. the previous month. Consumer inflation rose 7.7% year over year, lower than the projected 8% increase and below last month's 8.2% annual inflation rate. Core prices were up 6.3%. Both consumer prices and core prices were lower than economists expected.
Meanwhile, first-time unemployment claims also came out at 8:30 a.m. ET. Initial claims rose to 225,000 vs. 217,000 the previous week.
After the inflation numbers were released, the probability that the Fed will raise rates by 0.5% shot up to 80.6%, while the chance for a 75-basis-point hike declined to 19.4%, according to the CME FedWatch tool.
"Markets are applauding the cooler inflation print. Expectations for a downdraft in rates (have) begun with expectations for the (Dec. 14) rate hike anchored at 50 basis points," said Quincy Krosby, chief global strategist for LPL Financial.
But John Lynch, chief investment officer for Comerica Wealth Management, cautioned that investors may be reacting too optimistically to the easing of headline inflation. "We believe this is yet another triumph of hope over reality. Sustained price pressures in housing, wages and energy indicate a prolonged battle against inflation. Indeed, Fed Chair Jerome Powell last week was unambiguous in his comments that rates would remain higher for longer."
Meanwhile, investors seemed to have already forgotten Tuesday's midterm elections, which showed the Republican Party had likely gained control of the House but that control of the Senate still was undecided.
EV Stocks Soar On Earnings, Tesla Follows
Shares of electric-vehicle maker Rivian Automotive soared more than 17% after it beat earnings views but narrowly missed analysts' sales estimates.
Chinese EV startup Nio reported mixed third-quarter earnings results early Thursday. It also gave conservative guidance in the wake of Covid-related production curbs. Nio stock jumped 11% after tumbling Wednesday to near two-year-plus lows.
Electric-vehicle giant Tesla traded up 6.2% Thursday as it tries to end a four-day losing streak.
Big Pharma stock AstraZeneca jumped more than 6% Thursday after reporting Q3 earnings and sales that beat estimates. AZN shares are forming a cup base with a buy point of 68.36.
Shares of Veru collapsed Thursday after the Food and Drug Administration's advisors voted against the company's cancer-drug-turned-Covid treatment.
IBD 50 Soars, Led By WingStop
Financial software developer Fair Isaac soared more than 23% after it reported fiscal fourth-quarter earnings that beat analyst estimates. FICO soared well past its 508.09 buy point from a cup with handle.
Outdoor products maker Yeti shot up nearly 30% after reporting earnings early Thursday that beat analyst estimates for both earnings and sales. The stock is still well below its peak of 108.82 on Nov. 5. 2021.
Amusement park operator Six Flags jumped more than 15% after amending its existing cooperation agreement to permit H Partners to increase its beneficial ownership of Six Flags common stock to 19.9%.
The Innovator IBD 50 ETF gained 3.3%, led by Medpace, Sociedad Quimica Y Minera and Wingstop. WING stock jumped more than 6%, extending the rally in junk-food stocks and soaring past its buy zone.
Follow Michael Molinski on Twitter @IMmolinski
