--- title: Stocks Jump After New Inflation Report Spurs Hope for Fed Rate Cuts description: The May Consumer Price Index shows inflation is easing, increasing the odds the Fed will cut interest rates. Stocks jumped as a result. authors: - name: Pete Grieve role: Lead News Reporter url: https://money.com/author/pete-grieve/ bio: Pete Grieve is a personal finance reporter. In his time at Money, Pete has covered everything from car buying to credit cards to the housing market. education: University of Chicago, BA Political Science at_money_since: 2022 articles: 600 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://twitter.com/pete_grieve - https://linkedin.com/in/pete-grieve-b5aa02138 - https://www.facebook.com/petegrieve4 editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2024-06-12T20:55:32.000Z' modified: '2024-06-12T20:55:32.000Z' section: Economy and Politics tags: - inflation - News word_count: 561 canonical: https://money.com/stocks-jump-inflation-fed-rate-cuts/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Traders work on the floor of the New York Stock Exchange](https://img.money.com/2024/06/News-Inflation-Affects-Stock-Market.jpg) Federal Reserve officials [held interest rates steady](https://www.federalreserve.gov/newsevents/pressreleases/monetary20240612a.htm) on Wednesday, but the chances of one or more rate cuts in 2024 are very much alive after new data indicated inflation is cooling. [Stocks](https://money.com/how-to-buy-stocks/) jumped in reaction to the latest consumer price index (CPI) report, which showed a lower-than-expected annual inflation rate of 3.3% in May. Monthly inflation was flat for the first time since July 2022. The [S&P 500](https://money.com/what-is-the-sp-500-index/) and the tech-heavy Nasdaq indexes reached new record highs on Wednesday, before closing the day up 0.9% and 1.5%, respectively. Investors have been eager for a CPI print like this that could motivate the Fed to think more seriously about a rate cut. “Following a string of hot inflation reports to start the year, a rate cut in 2024 remained possible only if it were followed by at least as many months of offsetting, cooling data. April's and May’s CPI reports have been consistent with that hope,” Matt Colyar, a Moody’s Analytics economist, said in a note predicting a rate cut in September (and another in December). ## Regain financial stability with the help of Freedom Debt Relief ### Freedom can start you on the path to resolve your debt, especially if you owe over $20,000. Why wait? Select your state to get started today! [Get Started](https://money.com/pr/l67257dab4e3?ap_referrer=%2Fstocks-jump-inflation-fed-rate-cuts%2F) In a statement, the Fed mentioned "modest" progress toward its target of 2% [inflation](https://money.com/when-will-fed-cut-interest-rates/), but it's still unclear how far out a rate cut might be. New "dot plot" predictions released Wednesday show that eight Fed leaders expect two cuts in 2024, while seven expect one cut and four expect no cuts. The Federal Reserve began hiking rates in 2022 in order to cool the economy and (hopefully) rein in inflation. As inflation decreases, it's expected that the Fed will slash rates, which will lower borrowing costs, thereby stimulating the economy (and the stock market). But the timeline for lowering rates is uncertain. The officials who don't expect cutting are likely concerned about how sticky inflation has been this year, and they're also seeing evidence of a strong labor market. (Friday’s [jobs report](https://money.com/when-will-fed-cut-interest-rates/) showed the economy added 272,000 jobs, which smashed expectations.) ## May CPI comes in lower, boosting the odds of rate cuts Lower gas and energy prices helped inflation stay flat. Gas prices “entered the spring elevated due to headlines about the war in the Middle East, and then dipped in May as demand came in weaker than expected,” Bill Adams, chief economist for Comerica Bank, said in a note. There was good news outside of energy, too: Colyar notes that core CPI was softer than expected, rising 0.2% over a month. This index excludes food and energy, which are volatile items that the Fed doesn't pay as much attention to. Used vehicle prices are down 9.3% over the past year, and new car prices are down by 0.8% year-over-year after falling 0.5% in May. The apparel index has only increased 0.8% in a year. [Car insurance](https://money.com/best-auto-insurance/) has been one of the hottest inflation items, with costs up more than 20% compared to May 2023. In just the past month, however, prices declined 0.1%, which could be a sign of that price growth is finally moderating. “The only thing missing from today's \[CPI\] report for the Fed was a further moderation in rent and owners' equivalent rent, which were little changed on the month,” Bank of America analysts said in a note. ## One of the best ways to pay less for Car Insurance is by comparing rates ### Click below to begin finding your rate today. [View Rates](https://money.com/pr/i86244fe9d5c?ap_referrer=%2Fstocks-jump-inflation-fed-rate-cuts%2F) ![](https://s3.consumersadvocate.org/prd/image/image/25289/medium_2e7b27ce-b30d-40a3-beef-0139ecba6b47.png) If you owe over $20,000 or more, Freedom Debt Relief can help you get back on your feet! [Get Started](https://money.com/pr/u5c2defb44d4?ap_referrer=%2Fstocks-jump-inflation-fed-rate-cuts%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/stocks-jump-inflation-fed-rate-cuts/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "Inflation", "item": "https://money.com/inflation/" }, { "@type": "ListItem", "position": 4, "name": "Stocks Jump After New Inflation Report Spurs Hope for Fed Rate Cuts" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/stocks-jump-inflation-fed-rate-cuts/#webpage", "url": "https://money.com/stocks-jump-inflation-fed-rate-cuts/", "name": "Stocks Jump After New Inflation Report Spurs Hope for Fed Rate Cuts", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2024-06-12T20:55:32.000Z", "mainEntity": { "@id": "https://money.com/stocks-jump-inflation-fed-rate-cuts/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/stocks-jump-inflation-fed-rate-cuts/#breadcrumb" }, "dateModified": "2024-06-12T20:55:32.000Z" }, { "@type": "NewsArticle", "headline": "Stocks Jump After New Inflation Report Spurs Hope for Fed Rate Cuts", "articleSection": "Economy and Politics", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2024/06/News-Inflation-Affects-Stock-Market.jpg", "width": 2482, "height": 1655, "caption": "News-Inflation-Affects-Stock-Market" } ], "author": [ { "@type": "Person", "name": "Pete Grieve", "url": "https://money.com/author/pete-grieve/", "@id": "https://money.com/author/pete-grieve/#author", "description": "Pete Grieve is a personal finance reporter. 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