Major U.S. indexes are moving higher Wednesday as stability in the bond market translates into gains for stocks.
A key measure of inflation was lower than expected last month, helping to calm investors who had worried that prices could rise too quickly as the economy recovers.
The S&P 500 index rose 0.7% as of 12:21 p.m. Eastern. The Dow Jones Industrial Average rose 377 points, or 1.2%, to 32,205 and the technology-heavy Nasdaq rose 0.4% following a jump of 3.7% on Tuesday.
U.S. consumer prices increased 0.4% in February, the biggest increase in six months. However, a closely watched measure called core inflation, which excludes food and energy prices, posted a much smaller 0.1% gain. The rise for core inflation was also below economists’ expectations.
The latest report on inflation, along with the Federal Reserve remaining dovish on raising interest rates, has helped ease concerns over the recent rise in bond yields, said Katie Nixon, chief investment officer at Northern Trust Wealth Management.
Bond yields rose sharply over the past month due to expectations for faster growth and the inflation that could follow. The fall in bond prices attracted investors reluctant to pay high prices for stocks, especially tech stocks that looked most expensive.