U.S. equities are surging on Oct. 24 after data from the U.S. Bureau of Labor Statistics showed that inflation in America was softer than expected during September.
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The Consumer Price Index (CPI) rose 0.3% on a monthly basis in September, putting the annual inflation rate at 3%. Economists had been looking for readings of 0.4% and 3.1%, respectively. The weaker-than-expected inflation reading increases the likelihood of another interest rate cut from the U.S. Federal Reserve at its meeting on Oct. 29.
Expectations for a 25 basis point rate reduction from the U.S. central bank have the Dow Jones Industrial Average up 400 points in early trading on Oct. 24. The benchmark S&P 500 index and the technology-laden Nasdaq index are each up about 1% on the day.
Contributing Factors
Excluding volatile food and energy prices, core inflation rose 0.2% month-over-month in September and at an annual rate of 3%. The inflation report is the only official economic data allowed to be released during the current government shutdown in Washington, D.C.
As such, the September inflation data was closely watched by financial markets and investors are reacting with relief at the soft data. The Bureau of Labor Statistics said that a 4.1% rise in gasoline prices was the largest contributor to September inflation. Food prices in the U.S. advanced 0.2% during the month. Commodity prices overall rose 0.5%.
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