November 10th CPI Result: October Inflation Sparks a Faceripper!

October inflation: cooler than expected. Stocks: On fire. Today's CPI result all but insures that the Fed will slow the pace of rate hikes.

Justin Nugent

This article was last updated on 11/10/2022.

November 10th CPI Numbers (October Inflation Result):

  • October CPI 0.4% M/M, Exp. 0.6%
  • October CPI 7.7% Y/Y, Exp. 7.9%
  • October CPI Core 0.3% M/M, Exp. 0.5%
  • October CPI Core 6.3% Y/Y, Exp. 6.5%

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The second these results dropped, the market went into classic “everything rally mode”:

  • S&P 500 up more than 3%
  • Nasdaq up more than 4%
  • Dow Jones Industrial Average up roughly 2.5%
  • Russell 2000 up more than 3.5%

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Or in other words…

Why is the market rallying?

At the most recent FOMC, Fed Chair Jerome Powell said he does not see any signs that inflation is cooling. At the same time, he said that inflation does not need to cool in order for the Fed to begin slowing the pace of rate hikes. 

This October inflation reading, which was substantially cooler than expected, seems to defy Powell’s thoughts on the matter, and simultaneously gives the stock market the green light that rate hikes are not about to be as plentiful, or as powerful, going forward.

In response to the soft October inflation reading, Fed member Harker said that he:

Expects that the Fed can slow rate hike pace in coming months.

As a result of October inflation defying what central bankers expected, stocks are defying gravity. We’ll be back later today to update this piece with the results of the rally — after all, it’s still the premarket, and anything could happen. But if the “smart money” institutions and hedge funds have anything to say about it, they’re expecting a bounce in at least a two key economically sensitive names:

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