GLOBAL-MARKETS-Stocks jump, yields fall after cooler US consumer prices

BY Reuters | ECONOMIC | 05/15/24 11:55 AM EDT


Major U.S. stock indexes higher


Dollar down after CPI report


Oil gains

By Caroline Valetkevitch

NEW YORK, May 15 (Reuters) - Global stock markets jumped while U.S. Treasury yields fell to five-week lows on Wednesday as data showed U.S. consumer prices rose less than expected in April, suggesting inflation has resumed a downward trend in the second quarter.

The U.S. dollar declined. The consumer price index report raised hopes among some investors that the Federal Reserve may cut interest rates in September.

The MSCI All-World share index rose to new record highs, while the Nasdaq was up about 1% and leading gains in the U.S. stock market.

The U.S. Bureau of Labor Statistics said its consumer price index rose by 0.3% in April, below expectations for a rise of 0.4%, matching March's 0.4% increase, while on an annual basis, CPI rose 3.4%, in line with forecasts and below the previous month's 3.5% rate.

Separately, U.S. government data showed retail sales rose 3.04% year on year in April, versus March's 4.02% increase, and were flat on a monthly basis.

Investors do not anticipate any rate hikes in 2024, but they have had to dial back expectations for rate cuts, given how sticky inflation is.

CPI "was a good report," said Oliver Pursche, senior vice president and adviser at Wealthspire Advisors in Westport, Connecticut.

"As we've been talking about, progress is being made on the inflation front, but it is uneven. So I don't think this changes the Fed's trajectory or plan, but it should give investors and consumers confidence that we're moving in the right direction," he said.

On Tuesday, data showed U.S. producer prices increased more than expected in April, while Fed Chair Jerome Powell said the PPI data was "mixed" rather than "hot" because the prior month's data was revised lower.

The Dow Jones Industrial Average rose 283.91 points, or 0.72%, to 39,842.02; the S&P 500 gained 45.76 points, or 0.87%, to 5,292.44; and the Nasdaq Composite gained 161.58 points, or 0.98%, to 16,672.36.

MSCI's gauge of stocks across the globe rose 6.92 points, or 0.88%, to 792.80. The STOXX 600 index rose 0.6%.

U.S. Treasury yields fell to more than five-week lows after the CPI report.

Benchmark 10-year yields were last down 8.2 basis points on the day at 4.363% and got as low as 4.340%, the lowest since April 5.

The dollar fell broadly after the CPI report, with the euro rising to a one-month high of $1.0869.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was last down 0.63% at 104.39, with the euro up 0.48% at $1.087.

Against the Japanese yen, the dollar weakened 1.03% to 154.81.

U.S. crude gained 0.31% to $78.26 a barrel and Brent rose to $82.53 per barrel, up 0.21% on the day.

(Additional reporting by Amanda Cooper and Ankur Banerjee; Editing by Bernadette Baum and Jonathan Oatis)

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