US stocks find surging momentum on US CPI

US stocks are strongly back into the green territory, putting on a short squeeze following the pre-market and opening selloff that ensued on the back of hot Consumer Price Index data.

Stocks plunged to lows for the year but bulls moved in at a big discount, sending the Dow Jones and S&P 500 higher by as much as 2% at one point.

The majority of investors and traders (91%) anticipate a fourth straight 75-basis-point interest hike by the Fed at its meeting in November, with 9% only believe there is a chance for a 100 bps rise.

Nevertheless, some price discovery is coming into the markets ahead of the Q3 earnings at the end o the week while the indexes trail along the bottom of a 50% correction of the March 2020 rally.

The Dow Jones Industrial Average was up 851 points, or 2.93%, at 30,062 and had recovered from the low of the day down at 28,660.94. The S&P 500 was up 93.80 points to 2.62% while the Nasdaq Composite was up 253 points, or 2.34%%, at 11,037.

Core CPI gained at its highest annual pace in 40 years, rising 0.6% for the month and 6.6% for the year and Fed funds futures are now pricing in 75 bps in December, up from 50. Moreover, terminal rate expectations rose to 4.85% in March. As a consequence, the 10-year Treasury yield rallied to 4.080% while the 2-year yield was up to 4.535%.

US CPI (MoM) Sep: 0.4% (est 0.2%; prev 0.1%).
US CPI (Y0Y) Sep: 8.2% (est 8.1%; prev 8.3%).
US CPI Core (M0M) Sep: 0.6% (est 0.2%; prev 0.6%).
US CPI Core (Y0Y) Sep: 6.6% (est 6.5%; prev 6.3%).