Investing.com -- Shares of Rocket Companies (NYSE: RKT) and other real estate-related stocks like UWM Holdings Corporation (NYSE: UWMC), Fannie Mae (OTC: OTC:FNMA (ST:FNMA)), and Freddie Mac (OTC: OTC:FMCC) saw significant gains in the wake of the latest inflation data. The report, which indicated that core inflation in December rose less than expected, has eased investor concerns about aggressive interest rate hikes, prompting a positive response in the stock market.
Rocket Companies led the surge with a 6% increase, while Fannie Mae and Freddie Mac both jumped by 9%. UWM Holdings Corporation saw a 3% rise, loanDepot (NYSE: LDI) increased by 4.7%, Walker & Dunlop (NYSE: NYSE:WD) climbed 5%, Pennymac Financial Services (NYSE: PFSI) grew by 3%, and Zillow Group, Inc. (NASDAQ: NASDAQ:ZG) (NASDAQ: Z) advanced by 6.7%.
The U.S. consumer price index’s rise of 0.4% last month, compared to the 0.3% increase in November, aligns with the Federal Reserve’s projections, suggesting fewer rate cuts this year. While the CPI advanced 2.9% in the 12 months through December, the core CPI, which excludes food and energy components, saw a 0.2% increase in December, calming fears of runaway inflation.
The Federal Reserve is not expected to cut rates at its January 28-29 policy meeting. With Goldman Sachs anticipating two rate cuts in June and December and Bank of America Securities believing the Fed’s easing cycle has ended, investors are keenly watching the central bank’s next moves. The Fed has already reduced its benchmark overnight interest rate by 100 basis points to the current 4.50%-4.75% range since launching its easing cycle in September.
The market’s positive reaction also reflects the broader economic context, including a resilient economy and the potential impact of President-elect Donald Trump’s proposed tax cuts, which could stimulate economic growth further.
As the real estate sector often benefits from lower interest rates, which can spur home-buying and refinancing activities, the less-than-expected rise in core inflation has provided a boost to companies like Rocket Companies and its peers, reflecting a more optimistic outlook for the industry.
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