Wall Street breathed a sigh of relief after a surprise slowdown in inflation spurred a stock rally and a plunge in bond yields, reinforcing bets the Federal Reserve is on track to keep cutting rates this year.
The US CPI rose in December by less than forecast, reinvigorating bets the Fed will cut rates sooner than previously thought. Swap traders are now back to fully pricing in a rate cut by July. That was a quick shift after hotter-than-estimated jobs data spurred bets the central bank would only be able to resume policy easing in September or October. Not to mention some wagers on hikes.
Nvidia-linked stocks surged in morning trading. Nano-X Imaging rose 22%; Serve Robotics rose 18%; SoundHound AI rose 13%; Innoviz Technologies rose 10%; Aurora Innovation and Cerence rose 9%; Recursion Pharmaceuticals rose 7%; Micron rose 6%; NEBIUS and Arm rose 5%; Illumina and Nvidia rose 2%.
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