NEW YORK — Wall Street rallied on Wednesday, January 15, after the latest inflation report showed continued progress in reducing price hikes, boosting investor confidence in the U.S. economy.
The Consumer Price Index (CPI) rose by just 3.2% in December, marking a significant improvement over previous months and signaling that inflation is steadily cooling.
The Dow Jones Industrial Average jumped 2.5%, while the S&P 500 and Nasdaq surged 2.8% and 3.1%, respectively. Investors responded positively to the data, which suggests that the Federal Reserve’s aggressive interest rate hikes are effectively curbing inflation without severely harming economic growth.
“The markets are encouraged by this steady decline in inflation,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “It’s a sign that the economy is stabilizing, and we may be nearing the end of the Fed’s tightening cycle.”
Sectors tied to consumer goods, technology, and housing saw significant gains as investors anticipated stronger demand and lower borrowing costs in the months ahead.
While the report offered a reprieve for markets, analysts cautioned that challenges remain. “We’re not out of the woods yet,” said Diane Swonk, chief economist at KPMG.
“Geopolitical risks and supply chain disruptions could still impact inflation trends.” For now, the positive report has provided a much-needed boost to investor sentiment as the economy continues its gradual recovery.
