Stock ETFs Hit All-Time Highs as Inflation Cools

Stock ETFs Hit All-Time Highs as Inflation Cools

US stocks hit all-time highs on Wednesday after the government released better-than-expected inflation figures for April.

The 522 billion dollars SPDR S&P 500 ETF Trust (SPY) jumped 1%, bringing its year-to-date gains to almost 12%.

Core consumer prices rose 0.3% from March to April, according to the Bureau of Labor Statisticsthe slowest pace of the year and equal to economists’ expectations.

Year over year, the core CPI rose 3.6%, the smallest increase in three years.

Although still above the Federal Reserve’s 2% inflation target, a month of as-expected inflation numbers was a relief to investors who had witnessed triple digits higher than expected in January, February and March.

April’s data reinforced the view that high inflation in the first quarter may have been a headwind and that price pressures would ease from here.

Yields on the 10-year and 30-year Treasury notes each fell about 10 basis points on Wednesday, pushing the iShares ETF on 7 to 10 year Treasury bonds (IEF) and the iShares 20+ Year Treasury Bond ETF (TLT) up 0.8% and 1.5% respectively.

In April, the yield on the 10-year bond climbed as high as 4.7%, with investors speculating that the Fed might not cut rates at all this year and might instead raise interest rates during his next decision.

Those fears eased on Wednesday. Fed funds futures prices suggest the central bank could cut rates twice this year: in September and December.

The S&P 500 fell 5.5% from its peak to its trough in April. All of these losses, and then some, have been erased following today’s decision.

The 267 billion dollars Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100, also hit record highs on Wednesday. The technology-heavy exchange-traded fund is up 10.3% year to date.

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