As of press release, the three major indices have collectively risen.$Dow Jones Industrial Average (.DJI.US)$up 0.34%,$S&P 500 Index (.SPX.US)$up 0.39%,$Nasdaq Composite Index (.IXIC.US)$rose 0.35%.

After the US CPI data for April was released, the market expected the Federal Reserve to speed up the pace of interest rate cuts this year. US Treasury yields fell sharply. The 10-year Treasury yield fell by more than 10 basis points, to a low of 4.34%, the lowest level since April 10. Both 2-year and 5-year Treasury yields fell by about 8 basis points.

At 8:30 a.m. EST, the US Bureau of Labor Statistics released the consumer price index (CPI) data for April, which has received much market attention.

The report shows that after seasonal adjustments, the US CPI rose 3.4% year on year in April, in line with expectations. The CPI increase in March was 3.50% year on year. The April CPI rose 0.3% compared to March, and is expected to be 0.40%. CPI rose 0.40% month-on-month in March. This is the first time in 6 months that the US CPI increase has declined.

Excluding food and energy, the US core CPI rose 3.6% year on year and 0.3% month on month in April, all in line with expectations. Economists believe that the core inflation rate reflects the underlying level of inflation better than the overall CPI. The US Bureau of Labor Statistics reports that housing and gas spending accounted for more than 70% of the increase.

Another data shows that retail sales in the US for April were the same as the March data, which meant that the figure had a 0% month-on-month increase, which was lower than the 0.4% increase expected by the market.

After the CPI data was released, traders increased their bets on the Federal Reserve's interest rate cuts in September and December. The swap market raised expectations for the rate at which the Federal Reserve will cut interest rates during the year; the Fed's swap price shows that the pace of interest rate cuts will accelerate in 2024. The current interest rate swap agreement shows that traders believe that by the September Federal Reserve meeting, the probability of cutting interest rates by 25 basis points is over 80%.

According to the latest data from CME's “Federal Reserve Watch Tool”, market traders currently expect the probability that the Fed will cut interest rates in September this year is about 68%.

Although the CPI data may allow the Federal Reserve to judge that inflation is returning to a downward trend, officials would like to see more data to gain the confidence they need to begin considering cutting interest rates.

Federal Reserve Chairman Powell said yesterday that interest rates will be kept high for a longer period of time to wait for more signs of cooling down. The Federal Reserve will “need to be patient to let restrictive policies work”. Some policy makers do not expect interest rates to be lowered at all this year.

Jason Pride, head of investment strategy and research at boutique wealth management firm Glenmede, said that the effect of these inflation data on the Federal Reserve is that it laid the first foundation for them to cut interest rates later this year.

Jason Pride said, “If the market is worried that the Federal Reserve will not cut interest rates at all, tonight's CPI report only mitigates some concerns. It didn't put the Federal Reserve on the path to immediately start cutting interest rates because they still need a few more similar reports to gain some confidence.”

Art Hogan, chief market strategist at Riley Wealth, said that in the worst case, the April CPI report was basically in line with expectations, while in the best case, there were no upside surprises, and in some ways it was better than expected.

Art Hogan believes that last month's hot CPI data was one of the reasons for the decline in the market, and this report is very much in line with expectations. This isn't a “hot” data, and today the market will celebrate it at some point.

He said that the US has made no significant progress in fighting inflation this year, but this is a step in the right direction to make the Federal Reserve feel more at ease. They can receive enough data before the September meeting, which is probably when they decide to cut interest rates.

Analyst Chris Anstey commented that the month-on-month increase in core CPI in April was in line with expectations, and the overall increase was slightly lower than expected. This preliminary inflation data will give the Federal Reserve a sigh of relief, so they can still claim that US inflation is falling back.

Analyst Joseph Richter said that the subconscious rebound in the US stock market is probably more due to a marked slowdown in US retail sales in April rather than the lower than expected CPI data for April. Over the past few months, sales data has often been ahead of product CPI.

Some analysts pointed out that the weak April retail sales report shows that high interest rates are beginning to seriously weaken consumers' spending power.

Prior to the release of Wednesday's CPI data, another inflation report on Tuesday indicated that US inflation was more sticky — the producer price index (PPI) rose 0.5% month-on-month in April, higher than expected, and at one point raised concerns that the Federal Reserve might delay interest rate cuts.

Tom Lee, head of research at Fundstrat Global Advisors, said there are signs that inflation in other areas, including housing and auto insurance, is easing, which could be a good sign for the market and the Federal Reserve's policies.

Tom Lee said, “This will show the market that US inflation is now normalizing and the economy is doing well. The restrictive effect of monetary policy is so great that the Federal Reserve actually needs to cut interest rates. That's pretty good for stocks. If the Fed continues to stay on hold, that is good for stocks; if it cuts interest rates, I think that would be better.”

Individual stocks in focus

Most star tech stocks rose, Tesla and Amazon fell nearly 2%, AMD rose nearly 2%, and Nvidia rose more than 1%.

Popular Chinese securities had mixed ups and downs. NIO fell more than 6%, Ideal Auto fell nearly 3%, and TSMC and Ali rose about 1%.

The rise of WSB concept stocks cooled down, Game Station fell more than 29%, and AMC cinemas fell nearly 22%.

$NIO Inc (NIO.US)$With a drop of more than 6%, the Ledao L60, the first model of the Ledao brand, was unveiled. The pre-sale price started at 21,900 yuan, 30,000 cheaper than the Model Y.

$Faraday Future Intelligent Electric Inc. (FFIE.US)$Continuing to rise by more than 84%, Jia Yueting responded to the sharp rise in stock prices: it can help Chinese car companies and supply chains quickly enter the US market.

$Boeing (BA.US)$With a drop of more than 1%, the US Department of Justice may consider filing a lawsuit for violating the settlement agreement.

edit/emily