Wall Street rises after inflation finally slows, ASX set to rise

“There was a lot lying on today’s CPI print to prove that disinflation was simply delayed these last three months and not derailed,” according to Alexandra Wilson-Elizondo, co-chief investment officer of the multi-asset solutions business in Goldman Sachs Asset Management.

A separate report showed a stall in spending growth at US retailers in April from March. It was a weaker showing than the 0.4 per cent growth economists expected.

Slowing retail sales could be seen as a positive for markets, because it could reduce the upward pressure on inflation. But a stalling out also raises worries about cracks forming in US consumer spending, which has been one of the main pillars keeping the economy out of a recession. Pressure has grown particularly high on lower-income households.

“Hopefully the consumer isn’t running out of steam, but with pandemic savings spent, rising delinquencies, slower wage growth, and now flat retail sales, a more abrupt slowing of the economy can’t be ruled out,” said Brian Jacobsen, chief economist at Annex Wealth Management.

That could threaten one of the main hopes that’s rallied the US stock market toward its record levels: The Federal Reserve can pull off the balancing act of slowing the economy enough through high interest rates to snuff out high inflation but not so much that it causes a bad recession.

A separate discouraging report released in the morning, meanwhile, said manufacturing in New York state is contracting more than expected.

On Wall Street, Petco Health + Wellness was helping to lead the market after jumping 18.9 per cent. It named Glenn Murphy, who is CEO of investment firm FIS Holdings, as its executive chairman.

On the losing end were GameStop and AMC Entertainment, as momentum reversed following their jaw-dropping starts to the week. GameStop fell 22.1 per cent, but it has still more than doubled for the week.

AMC Entertainment fell 19.5 per cent after it said it will issue nearly 23.3 million shares of its stock to exchange for $163.9 million in debt that it owes.

In the bond market, the yield on the 10-year Treasury eased to 4.35 per cent from 4.45 per cent late Tuesday. The two-year yield, which moves more closely with expectation for Fed action, sank to 4.74 per cent to from 4.82 per cent.

Traders are now forecasting a 93.3 per cent probability that the Fed cuts its main interest rate at least once this year, according to data from CME Group. That’s up from 89.7 per cent a day before.

Indexes in Asia were mixed. Stocks fell 0.8 per cent in Shanghai after China’s central bank left a key lending rate unchanged. Stocks in Europe rose.

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