The headline consumer price index, the government announced this morning, rose 0.3% in September. That follows on a 0.2% increase in August. The headline rate of inflation is now 1.5% year over year. That’s the highest rate of inflation for this number since October 2014. Core inflation–that is inflation excluding changes in the prices of energy and food, rose by just 0.1% in September after climbing 0.3% in August.
The market moved up on this news with the Standard & Poor’s 500 gaining 0.62%. The inflation numbers confirmed the market’s belief that the Federal Reserve will raise interest rates in December (since inflation continues to move up toward the central bank’s target of 2%), but that any interest rate increases after December will be few and slow (since inflation is still well below target.).
The market also got some help from the blowout earnings numbers Netflix (NFLX) announced after the close yesterday. The stock is up 19.27% as of noon New York time today. That just about matches the gains on the shares in last night’s after-hours session.
I wouldn’t be surprised to see the market’s advance fade into today’s close. Tomorrow brings weekly data on U.S. crude oil production and stock piles from the Energy Information Administration, and economic data on growth in China’s economy during the third quarter. Both of those are potentially market moving bits of news and traders may decide that they’d like to sit on the sidelines until the figures are announced.