Small caps up, buyers soothed by tame inflation data

Small-cap shares edged higher on the opening, supported by a reversal rally that was triggered ahead of the opening by a tame inflation report. At 9:53 a.m. ET, the Russell 2000 (NYSE:IWM) was up 3.24, or 0.44%, at 740.09.

The CPI (Consumer Price Index) headline figure came in at 0.2%, which was below the forecast of 0.3%. The “core” reading, which excludes food and energy costs, came in at 0.1%, also below the median forecast of 0.2%. The CPI report suggested inflation wasn’t raging out of control, which sparked a reversal in fortune for equities in the overnight session, and the buyers remained in place for the regular opening.

“Headline consumer inflation rose moderately in April because a sharp rise in food prices was partially offset by no change in energy costs,” Steven Wood, chief economist with Insight Economics, said in an email. “Meanwhile, core consumer inflation rose only slightly with largely offsetting price accelerations and decelerations in the various expenditure categories. Although energy prices are expected to rise sharply over the next several months, weakening economic activity over the next several quarters should help cap the gains in core inflation. Although the Fed is currently on hold, at least temporarily, they have heaved a collective sigh of relief with the release of this data,” Wood said.

The market appeared to take away a perception of a hawkish tone from the array of Federal Reserve speakers that were out and about Tuesday, and the CPI . . .

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