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U.S. stocks are rising after inflation data fuels hopes on lower rate hikes

Published 03/14/2023, 09:45 AM
Updated 03/14/2023, 10:44 AM
© Reuters.

By Liz Moyer

Investing.com -- U.S. stocks were rising after inflation data met expectations, fueling hopes for a smaller interest rate increase by the Federal Reserve next week.

At 10:42 ET (14:42 GMT), the Dow Jones Industrial Average rose 434 points or 1.4%, while the S&P 500 rose 1.9% and the NASDAQ Composite rose 2.2%.

The Bureau of Labor Statistics reported a 0.4% rise in the consumer price index in February from the previous month, cooling slightly from January’s reading. On an annual basis, inflation rose 6%, also cooling from the prior reading. Core prices, which exclude food and fuel, rose 0.5% from the prior month, slightly more than expected.

Most futures traders are expecting a quarter of a point rate hike next week, though 15% of traders are betting on the Fed to pause rate hikes, according to CME’s FedWatch tool. Just last week, expectations were running high for a half-point rate hike.

Also fueling hopes for a less aggressive Fed: the collapse of Silicon Valley Bank over the weekend, which has rippled through bank stocks on fears of a wider contagion. Regulators have stepped in to backstop depositors of SVB and Signature Bank, which also shut down.

Shares of large regional banks sank on Monday but were rebounding on Tuesday. KeyCorp (NYSE:KEY) was up 15% in early trading. Comerica Inc (NYSE:CMA) was up 11%, while PacWest Bancorp (NASDAQ:PACW) was up 52%. First Republic Bank (NYSE:FRC) was up 57%.

Meta Platforms Inc (NASDAQ:META) is cutting another 10,000 workers, incurring charges of as much as $5 billion, and warned about the possibility of economic uncertainty sticking around. Shares rose 5%.

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A California appeals court ruled companies can treat workers as independent contractors, boosting shares of ride-sharing apps Uber Technologies (NYSE:UBER) and Lyft (NASDAQ:LYFT), and delivery service DoorDash (NYSE:DASH).

Oil fell. Crude Oil WTI Futures were down 1.4% to $73.77 a barrel, while Brent Oil Futures were down 1.1% to $79.88 a barrel and Gold Futures were down 0.3% to $1909.

Latest comments

Alecta, biggest pension fund in Sweden, made a loss because they invested in SVB. Very curious how many other pension funds invested in banks like SVB. Perfect storm is coming
the losses on government and corporate bonds are going to dwarf the equity losses unless the Fed lowers rates so bonds aren't so underwater. Lots of intended consequences to the speed and amount of their hikes.
The stock market manipulation reached a point where it disgusts me. Well done
There are rumors that Regions bank RF is also extremely insolvent. I am taking all my funds out today
Cool! You can buy a sandwich.
I can buy your house
Which one?
What a joke. Inflation at 6% will erode all corporate margins and will shorely lead to more sticky inflation. Wages will rise to counter high inflation. Everybody who thinks the fed can sit on their hands and do nothing should not be trading in the first place. Anybody who thinks the fed should lower rates is dreaming of a resession so high it will collapse the USA. The endgame now, because the fed acted to late, is a deep resession, either caused by higher rates to combat inflation if the fed acts properly, or by inflation itself if the fed keeps playing chicken with inflation. There is no escaping a resession this time.
PS. BUY GOLG AND SILVER. AS MUCH A YOU CAN
Hope English isn’t your primary language
Great manipulative scam....a market collapse fear yesterday but.a bullish rebound today........ just to prevent Feds 50 bsp ......
the bond market is way bigger than the stock market. The bond market is already way under water and telling the Fed to stop. Losses already hundreds of billions.
Inflation data is good if you compared to 9% it was few months ago but its way high from the 2% estimate so looks like people in stock market are very optimistic.
natural gas prices down, but the rest...?
Inflation is not off. There are oceans of liquidity... watch the markets. It won't go so easy. An inflation come back is more than probably, really still is there. These is just a fear sellers squeeze. Let's see if it lasts. Opportunistic is the idea.
LoL, how that inflation data helps in market rally
The problem with news and market is which you trade. The market was down from last peak for 10 days, so a washout was close to happen. It did. SVB DIDN'T HAPPEN Thursday, was before. We just listen the fire truck and news start flashing red lights. Perfect for a washout. Right now they're talking about banks and balance sheets. Later you'll find who made money on this. The rest of the fireworks are the usual show. Start thinking about the next ones. Trade Nd don't guess, you have NO INFORMATION AT ALL. Follow what you see. 👍
Moodys cuts ratings on banks to negative. Keep buying stocks.
Fueling hopes? How was this concluded? Was it simply devined by Liz Moyer. The article reports nothing that substantiates this speculation. Terrible reporting. Please take a journalism class.
Fed futures trends obviously. This is an investing site, Liz isn't necessarily here to educate financial newbies.
Keep defending mediocrity, you are good at it.
The USA will collapse in 10 years tops
Oh, no. That is some bad news for sure. Can you tell us where we can keep apprised of the schedule?
Just another short loser that can't take being wrong. This whole site is full of them
We may actually get a 'Fed pivot' this time but for the wrong reasons.
the right reason is to protect the bond market and keep our national debt service below $1 trillion a year.
Moody's just downgraded the entire banking industry from stable to negative. Gulp!
existe tanta gente ignorante e incompetente no mercado hoje, que bancos sendo resgatados pelo gera perspectiva otimista... aff... BANCOS QUEBRANDO É SINAL RUIM POVO BURRO!
God is always with poor people.Now destroy rich us country.
There are poor people in the US too. Will they be spared? How will this destruction happen exactly? House by house? Block by block? Or will only states with above average incomes be destroyed? And after the destruction, will the poor be able to move in or will the areas be uninhabitable? Please advise.
$SPY up over 7 points on flat or hot economic data. Fed pauses and inflation spikes again. Total, complete manipulation of the markets
Ughhh no banks collapsing is fueling guaranteed rate cuts
uninformed comment
Hopes and dreams. ha ha ha
bigger pain ahead
Need more rationale to raise the Indexes further. Do not count on bad news on economy.
Once you have FED PIVOT on the brain it's impossible to let it go even when the FED says higher rates for longer.
When are you going to understand that it doesn't matter what the Fed says? Higher for longer died the day SIVB collapsed. They can't predict these things thats why thier predictions are 90% wrong
jason.. you have zero idea what you're yakking about
People have no idea how bad inflation is about to get
Stocks up! Wall St. loves Main St. misery!
we all know that. Wall St, The Fed and thr Government can careless about Main Street
Everything is awesome!
More like a pre planned scam to stop Feds from 50bsp rate hike......to lure retail investors keep buying stocks
Yep...this stinks but I think everyone knew the numbers would be fudged to fit!
This is true!!! I was having breakfast with the planers at the Shoney's in Toledo, and Big Foot (code name, but you know who I mean) said, let's make a scam to stop the Fed from raising 50 points so we can lure retail investors into the stock market. We all laughed, made the call and had some more pancakes.
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