U.S. stocks jumped Thursday after a long-delayed inflation report delivered a clear upside surprise, snapping Wall Street out of a four-session slide and reigniting hopes for interest-rate cuts.
The Consumer Price Index showed inflation cooling faster than expected in November, sending investors back into equities. The tech-heavy Nasdaq surged 1.4 percent, the S&P 500 rose 0.8 percent, and the Dow Jones Industrial Average added 0.1 percent, ending losing streaks across major indexes.
Headline inflation rose 2.7 percent year over year, well below economists’ expectations of 3.1 percent. Core inflation climbed just 2.6 percent, beating forecasts for a 3.0 percent increase and marking its lowest level in four years, according to the Bureau of Labor Statistics.
Markets quickly focused on what comes next. A faster slowdown in inflation could give the Federal Reserve room to cut interest rates, offering support to an economy showing signs of fatigue. Investors have grown increasingly sensitive to any hint that borrowing costs may soon come down, particularly as hiring momentum cools.
Caution remains. The October and November government shutdown disrupted data collection, and the BLS did not publish October price figures at all. That gap has raised concerns that November’s report may not fully capture underlying inflation trends.
Even so, longer-term forces appear to be working in the Fed’s favor. Housing costs, one of the most stubborn drivers of inflation, have eased after years of pandemic-era gains. Economists have long argued that this slowdown would eventually filter through to broader price pressures.
If the trend holds, the latest data could help settle a growing debate inside the central bank: keep rates elevated to finish the inflation fight, or cut sooner to prevent a slowing job market from tipping into higher unemployment.
For now, Wall Street is betting the inflation tide has turned.
