U.S. stocks soar after better than expected inflation stokes rate hopes

Investing.com — U.S. stocks surged on Tuesday after data showed that inflation cooled more than expected in October, offering support to the view that the Federal Reserve may be closing to ending its rate-hiking cycle.

By 10:55 ET (15:55 GMT), the was up 505 points or 1.5%, while the was up 2% and the was up 2.3%.

The main indices on Wall Street closed mixed on Monday in subdued trading at the start of a new week. The 30-stock Dow added 0.2%, while the benchmark S&P dipped by 0.1% and the tech-heavy Nasdaq shed 0.2%.

U.S. CPI cools more than expected

These gains followed the release of data showing headline inflation in the U.S. slowed by more than expected in October, in a boost for Federal Reserve officials keen on corralling price pressures in the world’s largest economy.

The U.S. rose by 3.2% in October on an annualized basis, decelerating from a rate of 3.7% in September. It was the reading’s first decline in three months. Month-on-month, the measure came in flat, down from a gain of 0.4% in September.

Economists had forecast a 3.3% annual gain and a 0.1% gain from the prior month.

Fed Chair indicated last week that further interest rate hikes were still possible as the central bank attempts to bring inflation back down to its 2% target, but the market still widely expects the Fed to stand pat at the year’s last meeting as inflationary pressures show signs of cooling. This result has prompted investors to speculate that the Fed’s next move may be a cut next year. 

Home Depot reports drop in 3Q sales

On the corporate side of the equation, big-box retailers are stepping up with earnings reports.

Home Depot (NYSE:) reported a smaller-than-anticipated 3.1% decline in third-quarter comparable sales as customers undertook more modest projects and home repairs. The retailer also indicated caution about the coming months, as it narrowed its full-year outlook, now expecting sales to fall by 3% to 4% from the prior year, compared with a previous expectation of a 2% to 5% decline. Shares rose 6.3%.

Target (NYSE:) follows with its earnings on Wednesday, while Walmart (NYSE:) and Macy’s (NYSE:) are scheduled to release their results on Thursday.

Electric vehicle maker Fisker Inc (NYSE:) reported disappointing earnings and said it would delay its quarterly regulatory filing. Shares were down 23%.

Oil helped by IEA lifting demand growth forecasts

Oil prices edged higher Tuesday after the International Energy Agency raised its oil demand growth forecasts for this year and next despite economic risks ahead. 

The IEA, in its , lifted its 2023 growth forecast to 2.4 million barrels per day from 2.3 million, and 930,000 barrels per day from 880,000 in 2024.

The agency, however, was careful to point to an expected deceleration in economic growth in nearly all major economies next year, but said its expectations were underpinned by hopes of interest rate cuts and the recent fall in crude prices.

The Organization of the Petroleum Exporting Countries had also slightly raised its 2023 forecast for growth in global oil demand, in its , released on Monday.

(Peter Nurse and Oliver Gray contributed to this item.)