Stocks soar after the cooler inflation report

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Stocks soar after the cooler inflation report

Pedestrians pass in front of the New York Stock Exchange earlier this week. Photo: Michael Nagle/Bloomberg via Getty Images The stock market boomed after Thursday's softer-than-expected : the S&P 500 closed up over 5%, while the tech-heavy Nasdaq Composite jumped 7% — the biggest rally in more than two years. Why it matters: Signs of easing price pressures are helping to feed a powerful recovery for a stock market battered by the Federal Reserve's and fears of a hard landing. The bond market rallied, too. The yield on the 10-year Treasury note dropped more than 30 basis points to 3.81%, the biggest single-day drop since 2009. Where it stands: Financial markets have endured a brutal sell-off in recent months. Even with Thursday's big gains, the S&P 500 is still down 17% so far this year.The selloff has been welcomed by the Fed. So-called tightening financial conditions is how the Fed slows demand. The opposite, loosening financial conditions, may put the Fed in a potentially tricky spot — particularly if it persists.The inflation report gives Fed policymakers cover to dial back rate hikes to a (still huge) half-point move. But chair Jerome Powell went to great lengths last week to signal to markets that slowing doesn't mean the central bank is backing down from its inflation fight.A parade of Fed officials welcomed Thursday's softer inflation reading, but warned the battle against inflation is far from over. Speaking at a conference in Houston, Dallas Fed president Lorie Logan said: "This morning's [Consumer Price Index] data were a welcome relief, but there is still a long way to go." Go deeper:

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