The Consumer Price Index (CPI) for October reflected a 7.7% increase over last year and 0.4% increase over the prior month, better than Wall Street expected. Economists surveyed by Bloomberg called for a 7.9% annual rise and 0.5% monthly gain.
Futures tied to the S&P 500 (^GSPC) rose almost 3%, while futures on the Dow Jones Industrial Average (^DJI) climbed by over 800 points, or 2.7%. Contracts on the technology-heavy Nasdaq Composite (^IXIC) advanced a whopping 3.6%. Meanwhile, Treasury yields tumbled following the report.
The moves come after each of the major averages slid at least 2% Wednesday over midterm election uncertainty.
Republicans appeared poised to take control of the House but did not sweep polls at the extent anticipated, undermining optimism over the market-friendly gridlock investors anticipated.
Even as Wall Street awaits political clarity, with vote counting still underway, GLOBALT Investments vice president and senior portfolio manager Thomas Martin argued that markets are laser focused now on only one thing: the effect of central bank tightening on inflation.
“So far, the effects seem to be not all that appreciably different from zero,” he said in a note late Wednesday. “Yes, there have been data points hinting at the easing of some prices, but they haven’t been able to muster sustainable momentum.”
WASHINGTON, DC – NOVEMBER 02: U.S. Federal Reserve Bank Board Chairman Jerome Powell answers reporters’ questions during a news conference on November 02, 2022 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)
Until the latest policy-setting meeting earlier this month, traders hoped Federal Reserve officials would ease their monetary tightening plans as economic data softens. But Chair Jerome Powell pushed back against the notion that a shift in the Fed’s path is imminent, with inflation and payrolls still firmly elevated.
“The recent inflation data have again come in higher than expected,” Powell said. “Price pressures remain evident across a broad range of goods and services.”
Renewed risk-off sentiment on Wednesday was also stoked by the fast collapse of FTX, the cryptocurrency exchange run by billionaire Sam Bankman-Fried. Concerns over the possibility of insolvency for FTX after rival Binance walked back on an emergency rescue deal to buy the firm wreaked havoc on crypto markets, with jitters pouring over into other risk assets. Bitcoin (BTC-USD) hovered around $16,300 Thursday morning.
UNITED STATES – MAY 12: Sam Bankman-Fried, CEO of FTX US Derivatives, testifies during a House Agriculture Committee hearing on Thursday, May 12, 2022. (Tom Williams/CQ-Roll Call, Inc via Getty Images)
On the corporate front, shares of Bumble (BMBL) sank 15% in extended trading after unveiling third-quarter revenue that missed Wall Street estimates and downwardly revised guidance for the current period over currency headwinds and Russia’s war in Ukraine.
ZipRecruiter (ZIP) shares, meanwhile, jumped by the same amount after the online employment marketplace raised its full-year outlook and greenlighted a $200 million increase to its share repurchase program.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc