Consumer prices rose less than expected in November, giving investors hope that inflationary pressures may be cooling enough for the U.S. monetary policy to be eased more than Wall Street anticipates.
The consumer price index rose at a 2.7% annualized rate last month, a delayed report from the Bureau of Labor Statistics showed. Economists polled by Dow Jones expected CPI to have risen 3.1%.
Nasdaq futures rose 1%; S&P 500 up 0.6%; Dow jones up 0.4%.
Core CPI, which strips out volatile food and energy prices, was also cooler than anticipated, increasing 2.6% over 12 months. It was expected to have increased by 3%.
This is the first report that encompasses the period during which the U.S. government was shut down. The stoppage disrupted the data collection process in that time. It also led to the cancellation of the October CPI release. This data was originally expected to be released on Dec. 10.
Still, investors will parse through the report as they look for clues on future monetary policy moves from the Federal Reserve. The Fed earlier this month cut its benchmark overnight rate by 25 basis points for the third time in a row.
“A tame CPI will reinforce 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.”
In September, CPI rose 3% on an annualized basis, coming in lower than expected.
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