San Francisco Frontiers - Wall Street stocks rise as traders shake off uptick in inflation

The annual rise in consumer price index (CPI) came in at 3.2 percent last month, the Labor Department said, while the "core" measure stripping out volatile food and energy prices rose 3.8 percent.

Both were slightly higher than expected, but not enough to deter expectations that rates may start coming down this summer.

On Wall Street, The Dow Jones Industrial Average finished up 0.6 percent, while the broad-based S&P 500 closed 1.1 percent higher.

The tech-rich Nasdaq shot up more than 1.5 percent -- fueled by companies including Nvidia and Meta, which rose by 7.2 percent and 3.3 percent, respectively.

"The market today breathes a sigh of relief that the threat of inflation is coming down," Adam Sarhan from 50 Park Investments told AFP.

"Inflation has not gone away yet, but the trend has shifted from rampant inflation, and now it's leveling out," he said.

- 'No longer petrified' -

Tuesday's inflation print is likely to keep the US Federal Reserve on hold as the central bank mulls the right time to start lowering its key lending rate from the current 23-year high of between 5.25 to 5.50 percent.

"Investors are no longer petrified about higher inflation," Sarhan said, adding: "They can look to other things like earnings to send stocks up."

The start of the year often sees a blip in inflation, said Chris Beauchamp, an analyst at trading platform IG.

Last year "started off with resurgent inflation and then saw it ease. If 2024 follows a similar pattern then we may still get our June rate cut," he told AFP.

Kathleen Brooks, an analyst at XTB.com, pointed out that Wall Street continued its recent rally after a similarly disappointing CPI report a month ago.

"We don't think that the February number will knock the rally in stocks in the short term," she said, with the stock market's recent health being driven as much by strong corporate results as the interest rate outlook.

"Overall, we expect financial markets to trade with a cautious tone in the coming days leading up to next week's Fed meeting," she added.

- Europe higher -

European shares opened higher and held on to their gains throughout the day, with the main indices closing up around one percent.

London was boosted by official British unemployment and wages data that raised hopes of a cut to UK interest rates in the coming months.

Hong Kong shares continued their recent advances, climbing more than three percent, helped by fresh buying of tech firms.

Electronics giant Xiaomi surged more than 10 percent after saying it would start deliveries of its first electric vehicle by the end of this month.

However, Tokyo fell again as speculation swirls that the Bank of Japan will next week shift away from its ultra-loose monetary policy.

- Key figures around 2130 GMT -

New York - Dow: UP 0.6 percent at 39,005.49 points (close)

New York - S&P 500: UP 1.1 percent at 5,175.27 (close)

New York - Nasdaq Composite: UP 0.9 percent at 16,265.64 (close)

London - FTSE 100: UP 1.0 percent at 7,747.81 (close)

Paris - CAC 40: UP 0.8 percent at 8,087.48 (close)

Frankfurt - DAX: UP 1.2 percent at 17,965.11 (close)

EURO STOXX 50: UP 1.1 percent at 4,983.20 (close)

Tokyo - Nikkei 225: DOWN 0.1 percent at 38,797.51 (close)

Hong Kong - Hang Seng Index: UP 3.1 percent at 17,093.50 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,055.94 (close)

Euro/dollar: UP at $1.0930 from $1.0929 on Monday

Dollar/yen: UP at 147.67 yen from 146.96 yen

Pound/dollar: DOWN at $1.2795 from $1.2812

Euro/pound: UP at 85.41 pence from 85.28 pence

Brent North Sea Crude: DOWN 0.4 percent at $81.92 per barrel

West Texas Intermediate: DOWN 0.5 percent at $77.56 per barrel

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F.Garcia--SFF