According to final results, the Dow Jones index gained 1.63% to 33,309.51 points, the Nasdaq jumped 2.89% to 12,854.80 points, its best score since the end of April and the S&P 500 climbed by 2.13% to 4,210.24 points, reaching its highest level for three months.

All sectors of the S&P 500 ended positive, especially discretionary spending (+2.81%) as investors see the slight price slowdown as a relief and a step in the right direction for consumer spending that matters for two-thirds of the US economy.

The positive market reaction affected not only equities, but also oil, which also ended higher, driven by a return of enthusiasm for risky assets.

As for the dollar, it fell 1% against major currencies as investors believe that with the price run appearing to have peaked, the Federal Reserve (Fed) may be less harsh on rate hikes going forward.

The US CPI price index remained unchanged over one month in July and stood at 8.5% over one year instead of 9.1% in June.

Prices have marked time mainly thanks to lower fuel costs.

“Today is a day when good news for consumers is also seen as good news by the markets,” reacted Art Hogan of B. Riley Wealth.

Towards a less aggressive Fed?

Calming inflation means that “it is likely that the Fed will not be as aggressive as it has been in the last two monetary meetings”, he added explaining the “celebration” of the market.

Nevertheless, officials from the American central bank, shortly after the publication of inflation and the so positive reaction of the market, recalled that the Fed remained determined to curb inflation by dint of tightening monetary screws.

Thus Neel Kashkari, of the Minneapolis Fed, recalled that "we were very, very far from declaring victory" against inflation and that the goal remained to bring it down to 2%.

Those words of caution did little to dampen investor enthusiasm, with a large majority (58%) now betting on a Fed rate hike of half a percentage point in September, instead of three-quarters of a point (0.75%) estimated the day before, according to futures.

Yields on 10-year bonds fell sharply just after the release of the inflation figure, even falling to 2.72%, before recovering to 2.79% around 2000 GMT.

Listed, Tesla shares climbed 3.89% to 883.07 dollars, while its boss Elon Musk sold nearly 7 billion dollars of his securities, a "poker move" from the multibillionaire who could by example presage an amicable compensation in the aborted takeover of Twitter, suggested to AFP Dan Ives, analyst at Wedbush Securities.

Twitter also rose 3.74% to $44.43.

All the big names in technology have recovered, from Meta (Facebook, +5.82%) to Netflix (+6.16%) via Alphabet (Google), Apple and Microsoft who have all taken more than 2%.

Disney ended up 3.98% at 112.43 dollars before jumping almost 6% in electronic trading after the close with the announcement of better than expected quarterly results and especially the contribution of 14.4 million additional subscribers.

Aircraft maker Boeing climbed 2.53% to $169.02 after American Airlines announced it had received its first 787.

The American air regulator (FAA) indicated on Monday that Boeing had made the "necessary changes" for a resumption of deliveries of its 787 Dreamliner, after a total suspension since May 2021 due to operational problems.

Shares of cryptocurrency exchange Coinbase rallied 7.37% to $94.14 the day after disappointing second-quarter results that caused a sharp drop in its price.

But the stock was down 1.36% in post-closing trading.

© 2022 AFP