Stocks Climb on Inflation Data

The Dow Jones Industrial Average added 0.8%, while the technology-focused Nasdaq Composite was up 0.2%. 

The yield on 10-year Treasury notes—which underpins borrowing costs throughout the economy—rose to 3.014% from 2.990% at Tuesday’s settlement. Earlier in the morning, yields had moved as high as 3.074% before retreating. Yields and bond prices move in opposite directions.

The consumer-price index increased 8.3% in April from the same month a year ago, decelerating from an 8.5% annual rate in March but above the 8.1% expected by economists. Lower annual inflation last month marks the first monthly easing of price increases since August 2021.

Investors hoping for a definitive sign that inflation is peaking may have been dismayed by the higher-than-expected reading, said

Michael Farr,

the chief executive and founder of Farr, Miller & Washington.

“The Band-Aid is still coming off slowly,” Mr. Farr said. “According to the Fed, we’re not near the end of this process that everyone wants over.

The trajectory of inflation and wages will determine how much the Fed will raise interest rates at its next policy meeting. The central bank last week lifted rates by half a percentage point, the biggest rise since 2000, and approved a plan to shrink its $9 trillion asset portfolio—kicking into a higher gear its campaign to rein in 40-year-high inflation.

“What we saw this morning was mostly in line with expectations—at least my expectations,” said

David Kotok,

the chief investment officer at Cumberland Advisors. Still, volatile markets have been primed to react strongly to any headline hinting at persistent price pressures. “We’re in those kinds of crazy times,” he said.

Stocks, particularly in the U.S., have been hit by a wave of selling in recent weeks. Investors are contending with the unwind of easy monetary policies that had boosted gains for stocks and bonds since the early days of the pandemic.

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