Stocks Soared After A Better Than Expected Inflation Report

Plus 5 New Strong Buys for Today Stocks Soared After A Better Than Expected Inflation Report [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Soared After A Better Than Expected Inflation Report [Stocks Soared After A Better Than Expected Inflation Report]Image: Bigstock Stocks soared yesterday, notching their biggest one day gain since 2020. The Dow was up 3.70%. The S&P was up 5.54%. The Nasdaq was up a whopping 7.35%. And the small-cap Russell 2000 was up 6.11%. A better than expected Consumer Price Index (CPI) report sent stocks soaring. The market was expecting a 0.7% m/m increase in the headline rate and got 0.4% instead. On a y/y basis, it came in at 7.7%, down from last month's 8.2% and views for 8.0%. The core rate (ex-food & energy), was up 0.3% m/m vs. the consensus for 0.5%. And on a y/y basis, it was up 6.3% vs. last month's 6.6% and views for the same. Inflation is still too high. But the decline is giving hope that we may indeed have already seen peak inflation. Don't expect the Fed to stop raising rates anytime soon. At least not at December's meeting, or February's meeting. But after this report, it's looking more and more likely that the Fed slows their pace to 50 basis points their next time out, rather than 75 bps (like their last 4 meetings in a row). And if inflation can keep falling, their terminal rate may not need to climb to 5% after all, and hover nearer their 4.6% target they forecast back in September. Either way, the report was interpreted favorably. Stocks rallied sharply, while treasury yields and mortgage rates fell sharply. Great day. The midterm uncertainty is still out there as it's still too early to call which party will officially control the majority in which chamber of Congress. But, it's looking more and more likely that the lower house may change majorities, which would ensure gridlock. This is not a judgement on one party or another, but an acknowledgement that the market does well during periods of gridlock. And that would be a welcomed development at the moment. That's also illustrated by the Presidential Cycle which shows stocks typically make big gains after midterms (which typically results in one party controlling the White House while the other party controls one or both chambers of Congress). The 4-year Presidential Cycle shows that Q4 of year 2 (midterm year), is the second strongest quarter of all 16 quarters, with Q1 of year 3, being the strongest quarter. Moreover, year 3 (that's 2023), of the 4-year Presidential Cycle is the best year of all 4 years. So we are literally at the beginning of one of the best times for stocks. In fact, since 1950, stocks have always gone up in the year after midterms. And the average 12-month forward returns are 18.6%. So there's plenty of reason to get excited about the market right now. Today we'll get another look at the economy with the Consumer Sentiment report. And, of course, we'll get more earnings with another 231 companies on deck to report today. (And next week, we'll get another 601 set to report.) In the meantime, Q4 has so far lived up to its reputation as being the best quarter for stocks. And the midterm effect is off to a great start. Best, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research [Entry to New Zacks Portfolio Ends Sunday, Nov. 13]( This will be the last opportunity to get in on our new Alternative Energy Innovators portfolio for quite some time. Entry is limited to give our members the best chance for substantial profits. We're looking to get in early on small and large companies with trillion-dollar potential. Imagine buying Apple at $7.69/share after its famous TV spot in 1984. Or Microsoft at $21.00 in 1986. Your stake could have grown +1,800% and +1,092% respectively. Trillions in R&D, incentives, and investments are already pouring into solar... hydrogen fuel cells... next-gen nuclear... rare earth metals needed for batteries... wind... waves... and more. [See Our First Stocks With Breakthrough Upside >>]( Most Popular Articles from Zacks.com [4 Stocks to Buy Ahead of Earnings Releases Next Week]( Each of these stocks carries a Zacks Rank #2 (Buy) and has a positive Earnings ESP. [Read More »]( [4 Sector ETFs to Win from October Inflation Data]( The annual inflation rate in the U.S. decelerated for the fourth month to 7.7% in October, the lowest since January, and below forecasts of 8%. [Read More »]( [What Lies Ahead for Energy Stocks & ETFs]( Can the positive momentum continue after two phenomenal years for the energy sector? We discuss the key investment themes for the space. [Read More »]( [5 Top Stocks to Buy on New Analyst Coverages]( These stocks have recently witnessed new analyst coverage and are expected to attract investor attention. [Read More »]( [The Most Basic Value Stock Screen Ever]( New to value investing? Start with this simple stock screen. [Read More »]( [Increase Investment Returns with Free Zacks' Portfolio Tracker]( Catch breaking news on your stocks and funds at a glance, including timely recommendation changes ... Zacks Ranks ... Industry Ranks ... earnings announcements ... earnings estimate revisions ... and more. And now you can screen for new stocks to improve portfolio performance. [Click for Free Tracker & Screener >>]( [Bull of the Day: Douglas Dynamics (PLOW)]( Wintertime is a historically strong time for this heavy equipment company. [Read More »]( [New Zacks Strong Buys for November 11th]( Here are 5 stocks added to the Zacks Rank #1 (Strong Buy) List today. [Read More »]( More Zacks Resources Mobile App Download our app for convenient on-the-go access to even more—daily and weekly newsletters published by Zacks experts, proprietary research and tools, and Portfolio Tracker on Zacks.com. [Download our Zacks App for Apple iOS]( [Download our Zacks App for Android]( Zacks Members' Success Stories Visit [Success Stories]( to hear how Zacks research, tools and portfolios help our members outperform the market. Get all of our market insights and much more when you connect with us. [Visit Zacks on Facebook]( [Follow Zacks on Twitter]( [See Zacks videos on YouTube]( [Join Zacks on LinkedIn]( [Read Zacks Commentary on StockTwits]( This free resource is being sent by [Zacks.com](. We look for investment resources and inform you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms of Service". [www.zacks.com/terms_of_service]( Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research is not a licensed securities dealer, broker or US investment adviser or investment bank. The Zacks #1 Rank Performance covers the period beginning on January 1, 1988 through September 12, 2022. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank #1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit [( for information about the performance numbers displayed above. Zacks Emails If you would prefer to not receive future profit-producing emails from [Zacks.com]( the primary purpose of which is the commercial advertisement or promotion of a commercial product or service, then please [click here]( and confirm your request. If you have trouble with the unsubscribe link, please email support@zacks.com. Zacks Investment Research 10 S. Riverside Plaza, Suite 1600 Chicago, IL 60606