(Reuters) – The New York Stock Exchange opened higher on Wednesday after U.S. consumer prices showed a sharper-than-expected slowdown, raising hopes the Federal Reserve (Fed) may soon halt to its cycle of rising interest rates.
In early trading, the Dow Jones index gained 143.68 points, or 0.43%, to 33,828.47 points and the broader Standard & Poor’s 500 rose 0.48% to 4,128.61 points.
The Nasdaq Composite took 0.65%, or 77.81 points, to 12,109.68.
Data released Wednesday by the Labor Department showed headline and core (“core”) consumer prices rose 0.1% and 0.4% month on month in March, as economists were expecting 0.2% and 0.4%, respectively.
Consumer prices also slowed year-on-year, while the core CPI, which excludes food and energy, rose 5.6%, in line with estimates.
After the turmoil experienced by banks last month, these data support analysts’ expectations that the cycle of rising interest rates will soon see a pause.
“We are finally starting to see the compounding effects of the relentless rate hikes,” said Peter Andersen of Andersen Capital Management.
The director of fiscal affairs of the International Monetary Fund (IMF), Vitor Gaspar, however said that the data, which showed prices well above target, validated the institution’s emphasis on continuing the fight against inflation.
The “dollar index”, which measures the variations of the greenback against a basket of currencies, fell sharply after the publication of this data and fell by 0.61% at 13:35 GMT, while the euro reached its highest high level since February 2.
The ten-year US Treasury yield fell more than 4 basis points to 3.398% and the more rate-sensitive two-year Treasury fell more than 9 basis points to 3.9662
Market participants estimate a 67% chance that the Fed will raise interest rates by 25 basis points at its May meeting, according to CME Group’s Fedwatch tool.
In values, National Cinemedia, placed under the protection of American bankruptcy law and which has concluded a restructuring agreement with its lenders, gains 60%.
American Airlines lost 4.3% as its first-quarter profit forecast remained below analysts’ estimates.
Major technology stocks, such as Apple, Alphabet, Tesla and Meta rose 0.4% to 1%, supported by falling US Treasury yields.
U.S.-listed shares of Chinese firms Alibaba and JD.com fell 2.6% and 3.4%, on rising geopolitical tensions between China and Taiwan.
(Written by Diana Mandiá, Editing by Kate Entringer)
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