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Wall Street opens higher, US inflation slows

PARIS (Reuters) – The New York Stock Exchange opened higher on Wednesday after the release of U.S. consumer price data showed a slowdown in inflation year on year, which could prompt the U.S. Federal Reserve (Fed) to pause the rise in interest rates.

In early trading, the Dow Jones index gained 169.7 points, or 0.51%, to 33,731.51 points and the broader Standard & Poor’s 500 rose 0.79% to 4,151.91 points.

The Nasdaq Composite took 1.1%, or 133.42 points, to 12,312.97.

An hour before Wall Street opened, the Labor Department reported that the consumer price index (CPI) in April came in at 0.4% month on month and 4.9% year on year. year, against a Reuters consensus of 0.4% and 5.0% respectively.

So-called core inflation came out in line with expectations, at 0.4% over one month and 5.5% over one year.

Last week, when raising the “fed funds” target to 5.00-5.25%, the Fed hinted at a lull in its monetary tightening cycle.

Traders are now pricing in an 86% chance of a dovish rate at the US central bank’s June meeting, as the likelihood of another 25 basis point hike in the cost of money is assessed. at only 14%.

“Futures suggest that since the CPI is in line with expectations, the Fed will no longer have to raise rates and if that is the case we still have a reasonably strong economy,” comments Thomas Martin, portfolio manager at Globalt Investments. .

Interest-rate-sensitive tech stocks like Apple and Microsoft gain 1.12% and 0.90%, respectively, as ten-year Treasury yields fall 4.5 basis points to 3.471 %.

Alphabet takes 1.49%, the parent company of Google being about to unveil several products based on artificial intelligence, able to compete with Microsoft.

On the corporate earnings side, Airbnb plunges 11.49% amid slower growth in bookings in the current quarter, while Occidental Petroleum drops 1.50% after the publication of an adjusted quarterly profit below expectations .

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(Written by Claude Chendjou, edited by Kate Entringer)

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