U.S. October inflation pegged at 7.7%, sending Dow Jones futures soaring

Once sky-high inflation in the U.S. showed signs of cooling following the latest Consumer Price Index (CPI) data released today by the U.S. Bureau of Labor Statistics (BLS). According to the released figures, the CPI, which is a measure of prices for goods and services, rose 0.4 percent in October and 7.7 percent from a year earlier.

This is very impressive when compared to the 8.2% recorded in September and the 7.9% expected by analysts polled by Dow Jones.

“This certainly shows how concerned the markets are about the consumer price index and want to use it if some kind of assistance is obtained” said John Briggs of NatWest. “The Fed will slow down and peak rather than continue to aggressively raise rates 75 basis points at a time.“

The data sent a positive signal to investors that inflation in the U.S. has peaked, a good development for the overall economy. This fueled impressive growth in the stock market, with futures linked to the Dow Jones Industrial Average rising 844 points, a 2.6% increase. Futures linked to the S&P 500 jumped 3%, while futures linked to the Nasdaq 100 also saw growth of over 3.7%.

The inflationary update and the Federal Reserve’s response kept the market down to a very large degree as access to credit to support business growth was significantly stiffened. In pre-market action, many of the technology stocks posted notable gains in the early hours of trading on Thursday.

Meta is up 5.6% at $107.16, despite announcing that it would cut 13% of 11,000 of its employees earlier this week. Bitcoin and Ethereum are also leading the crypto-currency market’s upward trend following the news.

While bitcoin cut its losses to trade at $17,521.29, Ethereum is up 8.46 percent at $1,331.05 at the time of writing.

U.S. inflation and the expected response from federal authorities

With the U.S. inflation number falling impressively, analysts expect the Federal Reserve Open Market Committee (FOMC) to no longer maintain its flagship 75 basis point interest rate hike in the future.

“The question now is what we will hear from the Fed. That will determine how far the rally can go. One data point is not enough to confirm this statement, but it does strengthen the case [d’un pic d’inflation]” said BMO’s Ben Jeffery.

As it stands, Federal Reserve officials, including Chairman Jerome Powell, have reaffirmed that they will continue to fight inflation until it is brought down to the benchmark level of 2-4%. The numbers show that this is still a long way off and investors should keep an open mind on what they can expect from the economic drivers at their next meeting.