Wall St gains as inflation data bolsters bets of smaller rate hike

Wall Street’s main indexes surged on Tuesday as consumer prices in the world’s largest economy grew in line with expectations, supporting betting on the Federal Reserve raising interest rates by a lower amount at its next meeting.

The Consumer Price Index (CPI) in the United States increased 0.4% in February, compared to 0.5% the previous month, according to data. It increased 6.0% year on year last month, compared to 6.4% the prior month.

Removing volatile food and energy components, the CPI rose 0.5% in February after climbing 0.4% in January. The so-called core CPI rose 5.5% in the year to February, after rising 5.6% in January.

Equities have been crushed in recent days as a result of the collapse of SVB Financial Group and competitor Signature Bank, as well as concerns about the dangers to other banks from the Fed’s fast interest rate rises.

Investors are hopeful that the fear of a financial catastrophe would drive the Federal Reserve of the United States to lighten off on monetary tightening.

Regional bank stocks rebounded after suffering double-digit losses over the past few days, with the KBW Regional Banking index up 7.7%.

First Republic Bank jumped 52.7% before trading in its shares was halted for volatility. Shares of peer Western Alliance Bancorp were also halted.

The S&P 500 banking index rose 3.9% after recording its biggest one-day percentage drop since June 2020 in the previous session.

Meta Platforms Inc rose 5.8% after the Facebook-parent said it would cut 10,000 jobs in a second round of mass layoffs.

Other major Big Tech and growth stocks such as Apple, Alphabet Inc and Tesla rose between 1% and 4% in early trade.