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Stocks soar in relief
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June 16, 1999: 4:11 p.m. ET
Benign CPI reading soothes rate fears, giving Nasdaq a record surge
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NEW YORK (CNNfn) - Encouraging news that U.S. inflation remains dormant filled investors with relief Wednesday, sparking a powerful Wall Street rally for blue chips and technology shares alike.
The consumer price index remained unchanged overall in May and rose only 0.1 percent excluding food and energy prices, quieting speculation that a Federal Reserve interest rate hike was imminent. Wall Street had steeled itself to see the headline figure increase 0.2 percent.
According to preliminary data, the Dow Jones industrial average jumped 179.83 points, or 1.7 percent, to 10,774.82. Advances soundly beat declines on the New York Stock Exchange 1,932 to 1,098, but trading volume remained thin at 782 million shares.
The Nasdaq Composite left the Dow in the dust, scoring its best one-day performance to close up 102.52 points, or 4.25 percent, at 2,517.19. The S&P 500 index climbed 28.69, or 2.2 percent, to 1,329.85.
Analyzing the CPI reading, a key measure of inflation at the retail level, market watchers predicted the Fed either would hold off from a tightening move at its next policy meeting June 29 and 30, or would limit itself to a single rate increase instead of the several hikes many on Wall Street had feared.
"When we have such great inflation news, it's not necessary for the Fed to raise interest rates," said Brian Wesbury, chief economist at Griffin, Kubik, Stephens & Thompson. "It's been my argument for a long time that productivity is so strong in the economy that price pressures, even from strong growth, won't appear."
The inflation-wary bond market staged a rally of its own as interest rate anxiety receded for the time being. The bellwether 30-year Treasury bond climbed 17/32 of a point in price, lowering the yield to 6.07 percent.
The dollar also bounced higher against the euro on the strength of the rally in U.S. financial markets, but slipped against the yen. 
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