Tech Heavy Nasdaq Inched Higher As Inflation Eases Down
On Wednesday, the Nasdaq index was leading the gains as the CPI report showed inflation has started to ease down. According to experts, this is an indication that the Fed's policy of rapid rate hikes is indeed working.
After the CPI report, the Nasdaq jumped by 1.15% while the US T-yields fell lower. In fact, the Nasdaq has managed to achieve its highest intraday level if we look at the last 8 months.
Large Cap Tech Stocks Also Turn Higher
The majority of the large-cap tech stocks listed on the Nasdaq have also inched higher after the CPI release. This includes Microsoft Corp (MSFT) and Apple Inc (AAPL).
As per the report from the US officials, the CPI reading for the month of April was 4.9%, while Wall Street was expecting a 5% increase.
If we look at the Fed Funds Futures, there's now an 86% chance of no rate hike during the Fed's June meeting. On the other hand, there's a 14% chance of a 25-bps rate hike at the June meeting.
At the same time, the S&P 500 technology sector also gained 0.8%. This was expected since this index is rate-sensitive, and any hopes of a pause in rate hikes or rate cuts are regarded as positive news.
The DJIA, which is another important index from the USA, was rather an outlier since it went down by 0.20% (67.80 points). On the other hand, the Nasdaq Composite gained 0.79%, while the S&P 500 gained 0.27%.
Another stock which gained upside during this time period was Alphabet (GOOGL) which is a technology company. If we look at the charts, the Alphabet stock gained around 1.6% after the CPI release.
Over all, the prospects of lower inflation in the USA will prove to be good news for the stock market as a whole. But that may not be the case with the USD and other similar assets.