MSCI’s gauge of stocks across the globe was up 7.89 points, or 1.00%, to 793.77 and touched an intraday record high
Global stock markets rose to record highs while U.S. Treasury yields and the U.S. dollar dropped on Wednesday as data showed U.S. consumer prices rose less than expected in April, indicating inflation has resumed a downturn in the second quarter.
The CPI report raised expectations that the Fed will cut interest rates two times this year.
The Dow and S&P 500 registered record closing highs for the first time since March 28 and the Nasdaq posted a record closing high for the second consecutive session, while the MSCI world stock index was also set for a second successive record high close.
Europe’s main share index hit a record high as well.
The U.S. Bureau of Labor Statistics (BLS) said its CPI increased by 0.3% in April, below expectations for an increase of 0.4%, while on an annual basis, CPI was up 3.4%, in line with forecasts and below the previous month’s 3.5% rate.
Investors do not expect any rate hikes in 2024, but they have had to pare back expectations for rate cuts, given the persistence of inflation.
CPI “was a good report,” according to Oliver Pursche, senior VC and adviser at Wealthspire Advisors in Westport, Connecticut.
He added: As we have been talking about, progress is being made on the inflation front, but it is uneven. So I do not think this changes the Fed’s trajectory or plan, but it should give investors and consumers confidence that we are moving in the right direction.
Fed funds futures traders are now pricing in 52 bps of cuts this year, up from 45 bps on Tuesday, with the first 25 bp cut likely in September.
On Tuesday, data showed U.S. producer prices rose more than expected in April.
Minneapolis Fed President Neel Kashkari on Wednesday reiterated his view that he is unsure how restrictive monetary policy is right now, and that borrowing costs should stay where they are as U.S. central bankers take stock of inflation.
The DJIA gained 349.89 points, or 0.88%, to 39,908.00, the S&P 500 added 61.47 points, or 1.17%, to 5,308.15 and the Nasdaq Composite advanced 231.21 points, or 1.40%, to 16,742.39.
MSCI’s gauge of stocks across the globe was up 7.89 points, or 1.00%, to 793.77 and touched an intraday record high. The STOXX 600 index added 0.59%.
U.S. Treasury yields dropped to more than five-week lows following the CPI report.
Benchmark 10-year yields were last down 9 bps at 4.356% and hit 4.340%, the lowest level since April 5.
