By Yasin Ebrahim
Investing.com -- The S&P 500 jumped Wednesday, led by tech on falling U.S. Treasury yields as data pointing to signs that inflation may be nearing a peak eased fears that the Federal Reserve will have to continue with aggressive rate hikes.
The U.S. consumer price index , a measure of inflation, was flat in June compared with expectations for a 0.2% rise. In the 12 months through July, headline inflation eased to 8.5% from 9.1% in June but was still the highest since 1981.
The data suggested that inflation has “passed its peak,” Commerzbank said, as the “collapse in the price of gasoline played a decisive role.”
U.S. Treasury yields slumped as investors bet on a less hawkish Fed, with the 2-year Treasury yield , which is sensitive to fed rate hikes, slipping more than 2%.
Tech stocks, which have had a rocky start to the week following pressure from falling chip stocks this week, were aided by falling Treasury yields, which make valuations on growth stocks like tech more attractive.
Twitter (NYSE: TWTR ), meanwhile, gained more than 2% on bets that the social media giant may win its legal battle with Tesla (NASDAQ: TSLA ) chief executive Elon Musk to force the billionaire to complete his $44 billion deal to buy the company.
The Tesla CEO sold nearly $7 billion in Tesla shares over the past few days, to “avoid an emergency sale of Tesla stock” should Twitter force the deal to close, Musk said.
“[T]he chances of a Twitter deal now more likely,” Wedbush analyst Daniel Ives said, and raised the price target on Twitter to $50 from $30. reflecting the “higher chances the deal now ultimately closes.”
Financials, mostly banks, were also in ascendency as the Treasury yield curve steepened, though remained inverted pointing to ongoing fears of a recession, albeit a milder downturn somewhat, following the latest inflation data and strong jobs report last week.
The 2-year Treasury yield over 10-year yield steepened to 40 basis points following a dip to lower than negative 50 basis intraday.
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