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Stock Market News for Nov 11, 2022

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U.S. stocks closed sharply higher on Thursday to record their biggest single-day percentage gains in more than two years as economic data for October suggested inflation may be peaking. Also, falling treasury yields once again sparked speculation that the Fed might now go slow with its aggressive rate-hike policy. All three major indexes ended in positive territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) climbed 3.7% or 1,202.43 points to end at 33,715.37 points. This was also the blue-chip index’s highest closing level since August.

The S&P 500 jumped 5.5% or 207.80 points to close at 3,956.37 points, recording its highest closing level since August 12. Tech real estate and consumer discretionary stocks were the biggest gainers.

The Consumer Discretionary Select Sector SPDR (XLY) jumped 7.3%, while the Technology Select Sector SPDR (XLK) gained 8.2%. The Real Estate Select Sector SPDR (XLRE) gained 7.7%. All 11 sectors of the benchmark index ended in positive territory.

The tech-heavy Nasdaq rallied 7.4% or 760.97 points to finish at 11,114.15 points, its biggest single-day percentage gain since March 2020.

The fear-gauge CBOE Volatility Index (VIX) was down 9.81% to 23.53. A total of 14.9 billion shares were traded on Thursday, higher than the last 20-session average of 11.9 billion.

Stocks Rally on Positive CPI Data

Markets closed lower on Wednesday after ending in the green for three consecutive sessions but Thursday’s rally paired with the previous day’s losses. Stocks rallied on Thursday following the release of an impressive consumer price index (CPI) reading.

October’s CPI rose a meager 0.4% month over month and 7.7% from a year ago, recording its lowest annual increase since January. The data brought in a sigh of relief for investors who were worried that the aggressive interest rate hike stance adopted by the Fed to bring down soaring inflation could push the economy into recession.

Market participants were upbeat after the release of the CPI figures as many now believe that inflation has peaked and the Fed might now consider going slow on its steep rate hike stance. Also, several Fed officials on Thursday delivered positive public remarks that gave a boost to investors’ confidence.

Patrick Harker, Philadelphia Fed President, said that the central bank is likely to slow down its pace of rate hikes in the coming months.

The positive sentiment sent stocks on a rally with stocks across sectors gaining. All the 11 components of the S&P 500 ended in the red. Following the release of the CPI report, treasury yield fell. The 10-year Treasury yield fell around 33 points 3.828%. The 2-year Treasury yield fell around 30 basis points to end at 4.32%.

The sharp drop in treasury yields sent growth-sensitive tech stocks on a rally. Shares of Amazon.com, Inc. (AMZN - Free Report) surged 12.2%, while Netflix, Inc. (NFLX - Free Report) gained 8%. Also, shares of Salesforce, Inc. (CRM - Free Report) climbed 10.2%. Salesforce has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

The CPI report remained in focus on Thursday as October inflation figures indicated easing inflation. Data released by the Labor Department showed annual CPI figures below 8% for the first time in eight months.

The CPI rose 7.7% on a year-over-year basis in October, after increasing 8.2% in the prior month. For the month, headline inflation rose just 0.4% in October, beating expectations of a rise of 0.6%. Excluding volatile food and energy prices, or core CPI increased 0.3% for the month and 6.3% from a year ago, also beating expectations.

In other economic data released on Thursday, the Labor Department reported that jobless claims totaled 225,000 for the week ending Nov 5, increasing 7,000 from the previous week’s revised level of 218,000. The four-week moving average decreased to 218,750, a decrease of 250 from the previous week’s revised average of 219,000.

Continuing claims came in at 1,493,000, an increase of 6,000 from the previous week’s revised level of 1,487,000. The 4-week moving average was 1,450,250, an increase of 32,250 from the previous week's revised average of 1,418,000.


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