The stock market moved higher on Tuesday, even after consumer prices spiked 8.5% in the 12 months ending in March, as some investors hope that inflation is showing signs of moderation, with core inflation coming in lower than expected.
The stock market is rising on the hope that inflation has peaked.
The S&P 500 gained 1.1% and the tech-laden Nasdaq was up 1.6% in early trading.
The Labor Department reported Tuesday that consumer prices rose at the fastest pace in four decades in March.
While the overall inflation number was red-hot, markets got a boost from core inflation, which excludes volatile food and gas costs, rising just 3% in March, a smaller increase than last month and lower than what economists were expecting.
Some investors think that the lower core consumer price reading could mean that inflation is peaking after prices fell in several other categories, such as used cars.
Gas and food prices were among the largest drivers of higher prices in March, with gas prices spiking over 18% and accounting for over half of the monthly increase.
Government bond yields retreated slightly on Tuesday, helping to boost stocks, though the benchmark 10-year Treasury note remains above 2.7%, its highest level since January 2019.
The lower-than- expected core inflation number from today's report is a silver lining.
The cool down period could be very slow, according to Jeffrey Roach, chief economist for LPL Financial.
Inflation hit a 40-year high in March as Ukraine invaded.
The 10-year Treasury yield hit its highest level since January.
The stock market is rising as investors try to shake off inflation fears.
The Federal Reserve has a plan to shrink the balance sheet.
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