Stocks initially struggled for direction Thursday following the release of the December Consumer Price Index (CPI). However, once investors decided they liked what they saw, the major market indexes shot higher.
The Labor Department this morning said that the CPI was up 6.5% year-over-year in December, as prices rose at their slowest pace in six months. Core CPI, which excludes volatile energy and food prices, increased 5.7% on an annual basis, the lowest reading since December 2021.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Wall Street's top minds were quick to weigh in after the release of the December inflation report, including Anthony Denier, CEO of Webull, a commission-free trading platform. "All the CPI numbers came in exactly as expected," Denier says. "While the CPI didn't overdeliver, it's moving in the right direction, and we hope the trend down continues. While this is a good trend, it won't stop the Fed from continuing to raise rates."
Still, in the wake of today's inflation update, market expectations for the Federal Reserve to deliver a 25 basis point (0.25%) interest rate hike at its February meeting jumped to 95.2% from yesterday's 76.7%, according to CME Group. This would mark the lowest increase in the Fed's benchmark rate since March 2022. (The central bank issued four consecutive 0.75% rate hikes, followed by a 0.5% increase at its last meeting in December.)
Today's data were generally well-received on Wall Street, with the major benchmarks finishing the day with solid gains. The Dow Jones Industrial Average added 0.6% to 34,189 and the S&P 500 rose 0.3% to 3,983. Meanwhile, the Nasdaq Composite closed up 0.6% at 11,001, bringing its daily win streak to five.
The Best Stocks for Level-Headed Investors
The "key" part of today's inflation report is that the Fed's interest rate hikes worked, says Wes Gottesman, market advisor at TradeZing. "However, whenever the Fed discusses increasing the rates, market volatility ensues." And with the central bank likely to keep raising rates, at least through its next two meetings, "we will expect to see further volatility," he adds.
As such, investors should remain level-headed in 2023, Gottesman says. This can include exploring the best dividend stocks, which can help offset unexpected market declines with steady and reliable income. Low-volatility stocks and low-volatility ETFs will also add doses of defense to your portfolio.
-
Small Businesses Are Racing to Use AIThe Kiplinger Letter Spurred on by competitive pressures, small businesses are racing to adopt AI. A recent snapshot shows the technology’s day-to-day uses.
-
The Me-First Rule of Retirement SpendingFollow the 'Me-First" rule and you won't have to worry about running out of money when the stock market goes south.
-
S&P 500 Slips Ahead of Fed Week: Stock Market TodayAll eyes are on the Federal Reserve ahead of next week's critical policy meeting.
-
September Fed Meeting: Live Updates and CommentaryThe September Fed meeting is a key economic event, with Wall Street keyed into what Fed Chair Powell & Co. will do about interest rates.
-
Dow Gains 617 Points as Rate Cuts Near: Stock Market TodayWednesday's economic data didn't shift Wall Street's expectations that the Fed is preparing for a rate cut at next week's meeting.
-
Hot August CPI Report Doesn't Shift the Rate-Cut Needle: What the Experts SayThe August CPI came in higher than forecast on a monthly basis, but Wall Street still expects a rate cut at next week's Fed meeting.
-
S&P 500 Hits New High After Oracle Earnings: Stock Market TodayAnother down day for Apple held the Dow Jones Industrial Average back, though.
-
Stocks Grind Up to New All-Time Highs: Stock Market TodayUnitedHealth stock led the Dow Jones Industrial Average amid increasing signs the labor market has not been well for months.
-
Markets Prepare for August Inflation Data: Stock Market TodayApple CEO Tim Cook is still important, but price action this week is as much about incoming inflation data ahead of next week's Fed meeting.
-
Stocks Slip as Job Growth Stalls: Stock Market TodayThe August jobs report came in much weaker than expected, while the unemployment rate ticked higher.
