Dow rallies 700 points as new data raises hope that U.S. inflation may be

Stocks surged Thursday after October’s reading of consumer prices raised hopes that inflation has peaked.

The Dow Jones Industrial Average jumped 764 points, or 2.3%. The S&P 500 jumped 3.7%, while the Nasdaq Composite surged 5%.

The consumer price index, a broad-based measure of goods and services costs, rose just 0.4% for the month and 7.7% from a year ago. That was its lowest annual increase since January. Economists were expecting increases of 0.6% and 7.9%, according to Dow Jones. Excluding volatile food and energy costs, so-called core CPI increased 0.3% for the month and 6.3% on an annual basis, also less than expected.

“It certainly shows how much the markets been keyed about, worried about and wants to run on CPI if you get any sort of help here,” said John Briggs of NatWest. “It just brings up the idea of peak inflation, peak Fed…The Fed will slow and peak rather than continue to aggressively hike at 75 basis point as at a time.”

Treasury yields plunged after the CPI report, with the 10-year Treasury yield falling more than 18 basis points to 3.946%, falling below the key 4% level. The yield on the 2-year Treasury dropped more than 23 basis points to 4.395%.

Tech shares that have been the hardest hit this year as inflation and rates surged led the gains in early trading. Nvidia and Tesla soared 7.5% and 5.7%, respectively. Salesforce jumped 7%. Apple gained 5%.

Semiconductor stocks got a boost, with shares of Lam Research and Applied Materials each up more than 5%. KLA also popped 3.7%.

Thursday’s advance rekindled the comeback rally that began in mid-October but stalled in recent weeks. The Dow touched its highest since August on Thursday and the S&P 500 approached the 3,900 level, which has been key resistance for the market.