By Bansari Mayur Kamdar and Shreyashi Sanyal and Sinead Carew
(Reuters) – Major U.S. stock indexes rose on Wednesday after data showed that, despite a decades-long high, U.S. inflation broadly came in line with expectations, easing concerns. that the country’s central bank would have to withdraw its economic support even more forcefully than expected.
Ten of the 11 major S&P sectors closed higher. The S&P 500 and Nasdaq outperformed the Dow Jones, while growth stocks outperformed value stocks.
US Labor Department data showed that the Consumer Price Index (CPI) rose 0.5% last month, after rising 0.8% in November. In the 12-month period to December 2021, the CPI rose 7.0%, the peak in almost four decades. Economists polled by Reuters had predicted the CPI to have gained 0.4% in December and 7.0% year-on-year.
“Investors were bracing for even higher inflation than we actually saw. As bad as the number is and as much inflationary pressure as there is in the economy, there has been a little relief,” said Anthony Saglimbene, global market strategist at Ameriprise Financial in Troy, Michigan.
“Today’s inflation data validates the Fed’s trajectory and means they don’t need to be more aggressive than is already expected.”
The S&P 500 index closed up 0.28% at 4,726.35 points. The Dow Jones rose 0.11% to 36,290.32 points. The Nasdaq Composite technology index rose 0.23% to 15,188.39 points.
The day’s top gainers within the S&P were basic materials, up nearly 1%, consumer discretionary, up 0.6%, and technology, up 0.4%.
Growth and tech stocks have been staging a comeback this week as investors look at a variety of metrics to decide whether to buy the rally or prepare for further declines.
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