US equity markets at record

US equity markets moved higher Thursday as CPI came in on the softer side of expectations. US headline inflation declined 0.5% m/m in October against market expectations for a 0.3% drop. The y/y rate eased sharply to 1.3% from 2.1%, its lowest rate of price growth since 2002.

Furthermore, core inflation surprised on the downside with the y/y rate easing to 2.7% from 2.9% (consensus for 2.9%). The data, both in terms of inflation and activity, signal that the Fed will not hike again and this is providing reason for the equity market to rally. Investors continue to believe in a soft landing scenario.

FED’s Moskow and Poole suggesting that one weak inflation release would not make a trend underlines the inflation fighting bias of the FED, which was also revealed by Wednesday’s FED minutes. Fisher and Pianalto will speak today and there is little reason to assume that the content of

their speeches will differ significantly from the FED minutes or yesterday’s comments by Poole and Moskow.

The blue-chip Dow average achieved its longest winning streak since August, rising 54.11 points, or 0.44 percent, to end at a record 12,305.82, as investors snapped up shares of industrial companies such as Boeing Co. Thursday marked the Dow’s first close above 12,300. Earlier in the day, the Dow hit a lifetime intraday high at 12,325.91.

The Standard & Poor’s 500 Index gained 3.19 points, or 0.23 percent, to finish at 1,399.76, and during the session it jumped to a six-year intraday peak of 1,403.76. The Nasdaq Composite Index added 6.31 points, or 0.26 percent, to close at 2,449.06. During the session, the Nasdaq hit 2,453.35, its highest level since February 2001. For the Nasdaq, this marked its longest series of gains since September.