Both the S&P 500 and the Nasdaq 100 rose by over 1% on Thursday after the latest US inflation report was released. The consumer price index rose at a 2.7% annualized rate last month, a delayed report from the Bureau of Labor Statistics showed. The CPI was expected to rise by 3.1%. This is the first report that encompasses the period during which the U.S. government was shut down, and it comes over one week later than previously scheduled.
While the inflation report looks promising and the stock market responded positively, because the October CPI was canceled, Thursday’s report did not have all the usual data points of a typical CPI release. The Bureau of Labor Statistics (BLS) said it was unable to retroactively collect the October data, but did use some “nonsurvey data sources” to make the index calculations.
The tech-heavy Nasdaq Composite (^IXIC) led the way up with a gain of 1.4%, pushed north by a strong earnings report from Micron (MU), which saw its shares rise 10%. Shares in the benchmark S&P 500 (^GSPC) and the blue chip-heavy Dow Jones Industrial Average (^DJI) rose around 0.8% and 0.2%, respectively. However, some experts suggest that the gains should be taken with a grain of salt, as the latest inflation report is missing key data.
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Indeed, economists may be hesitant to read too much into this report as the start of a downward trend in inflation because of the lack of October comparison data in the release. The latest Fed rate cut also spurred stocks higher, but it also missed the key context missing from the latest CPI report. “A tame CPI will reinforce that the Fed is focused on protecting the employment market. And that means a Fed ‘put’ is now in place for the economy,” Tom Lee, head of research at Fundstrat, said in a note ahead of Thursday’s release. “In other words, if the Fed is concerned about downside risks to the economy, the Fed ‘put’ comes into play and this would be for stocks to rise.”