Wall Street rallies despite persistent inflation

Surprisingly, stocks are rising in the new year. This surprise surprised some market observers, whose expectations were low after the worst 2008 for equities. It was driven by continued inflation and an economic downturn.

The Dow, S&P 500 and Nasdaq Composite are all rising just half an hour before Wednesday’s market close. If the Dow, S&P 500 and Nasdaq Composite finish higher, it would mark the third straight positive close for the Dow and S&P — and fifth straight gain for the Nasdaq.

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In an interview with FOX Business, Richard Strasburger, a financial advisor at Alliance Wealth Partners, said “Most people were expecting the stock market to breakout, and many of them thought the breakout would be to the downside, possibly breaking the S&P 500 support level of 3,800-3,850.”

“This week, the S&P closed up Tuesday and Wednesday, and it is currently up today,” he continued. “But the market can quickly change direction so we will need to wait and see whether this is a breakout, or a fake-out.”

Year-to-date, the Dow, S&P, and Nasdaq are trading over 3%, 4% and almost 6% into green territory respectively, after all three posted significant declines in 2022.

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Inflation continued to increase cool in DecemberThis is the latest indication that the grip of the U.S. economic system by high prices for consumers is beginning to ease.

Thursday’s Labor Department announcement showed that the Consumer Price Indicator, a broad measure measuring the cost of everyday goods like gasoline and groceries, dropped 0.1% in December compared to the previous month.

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On an annual basis, prices increased 6.5%

These figures were both in line to Refinitiv economists’ forecasts. It could be a signal that the Federal Reserve will slow down its aggressive interest-rate hike campaign next month, possibly giving it pause.

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Megan Henney was a contributor to this report.

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