- Stocks surged in a buy-everything relief rally as slower-than-expected price growth fueled bets that the Federal Reserve will ease up on its aggressive rate-hiking policy.
- The S&P 500 rose 5.5% on the first day after the CPI report, the best first-day reaction since at least 2003 when records began. More than 90% of the benchmark's stocks were in the green. The rally caught short-sellers off guard, contributing to the outsized gains. Despite the turmoil surrounding the crypto exchange FTX, the shift in sentiment helped crypto markets stabilize.
- Headline Inflation was 7.7%, the lowest since January, prior to Russia's war in Ukraine, which drove up commodity prices. More importantly for the fed, the core measure excluding food and energy slowed sooner than expected.
- Thursday's ferocious rally only partially recoups steep losses for risk assets, which have been hammered this year by the Fed's tightening. The S&P 500 is still down 17%, while the Nasdaq 100 is down nearly 30%, putting both on track for their worst years since 2008.
- Fed officials appeared to support a reduction in rate hikes following a string of four jumbo-sized increases. They also emphasized the importance of maintaining a strict policy.
- Dallas Fed President Logan stated that it may soon be appropriate to slow the pace in order to better assess economic conditions. Fed's Daly said the moderation was "good news," but that "pausing is not the discussion, the discussion is stepping down."
