Inflation is cooling, and Wall Street loves it

CNN

By Paul R. La Monica, CNN Business

Stocks surged Tuesday morning after the US government reported that wholesale prices rose at a far less dramatic rate than expected. That news come just a few days after another report showed that the pace of consumer price increases was also slowing.

The Dow popped more than 300 points, or 0.9%, shortly after the opening bell. The S&P 500 and Nasdaq rose 1.6% and 2.5% as well. Investors are hoping that the cooling inflation pressures will lead the Federal Reserve to raise interest rates by smaller amounts in the next few months, following four consecutive historically large hikes.

Solid earnings from retail giant Walmart, one of the 30 components in the Dow, also helped boost market sentiment.

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