U.S. inflation eases more than expected -report

STORY: The closely watched consumer price index, or CPI, rose less than expected in October, suggesting that red hot inflation in the U.S. may be starting to cool, opening the door for the Federal Reserve to slow its hefty interest rate hikes.

The Labor Department said on Thursday that CPI rose 0.4% last month and 7.7% from a year ago.

That's after rising 8.2% on the same basis in September, marking the first time since February the annual increase for CPI was below 8%.

The stock market surged on the news, with the S&P 500 jumping 4% in early trading, as the better-than-expected inflation data led investors to believe the Fed could ease up on its aggressive plan to raise rates to bring down inflation.

The Fed last week delivered its fourth consecutive 75-basis-point interest rate hike and said the fight to lower inflation to its 2% target would require borrowing costs to rise further...

But the central bank signaled that it may be nearing an inflection point and that future rate increases my come in smaller increments.

Meanwhile, a second report from the Labor Department on Thursday, which the Fed also considers in its policy decisions, showed the number of Americans filing new claims for unemployment benefits increased last week, potentially bolstering the case for the Fed to slow its roll on rate hikes.