The stock market closed slightly higher on Wednesday, despite consumer prices rising again last month – with inflation hitting nearly 40-year highs, suggesting that the market has already priced in a lot of uncertainty as investors shrug off the bad news rails.
Equities remained broadly stable: the Dow Jones Industrial Average rose 0.1%, while the S&P 500 rose 0.3% and the tech-heavy Nasdaq Composite rose 0.2%.
Wednesday’s small market gains came after consumer prices rose another 7% on an annualized basis last month, the largest annual increase since June 1982, according to data released by the Department of Labor.
While headline prices have increased 0.5% since November, this has largely been in line with economists’ expectations, not to mention a slight decrease from the previous month’s 0.8% increase.
Comments from Federal Reserve Chairman Jerome Powell, a day earlier, who said tighter monetary policy was needed to control rising prices, helped stocks hold firm despite dismal inflation data on Wednesday.
The Fed is now planning to curb its monthly bond purchases through March and begin raising rates shortly thereafter – with three rate hikes for 2022, although some experts are predicting more.
Tech stocks, which had suffered a sharp sell-off so far in the new year, rebounded somewhat on Wednesday, with shares of Microsoft and Google parent Alphabet each rising nearly 1.5%.