Wall Street stocks surge amid optimism on lower inflation

Seizing on data showing a slowdown in annual consumer price inflation, U.S. equities pushed sharply higher in early trading Thursday.

The closely watched data report showed the annual consumer price index (CPI) rose 7.7 percent in October, easing from September's pace and the lowest of the year, the Labor Department reported.

After dropping in Wednesday's session following the U.S. midterm elections, the Dow Jones Industrial Average rebounded 2.6 percent to  33,370.95 about 50 minutes into the trading session.

The broad-based S&P 500 jumped 4.2 percent to 3,905.77, while the tech-rich Nasdaq Composite Index surged 5.7 percent to 10,943.23.

Even though inflation remains near the highest in decades, the slowdown gives hope that the Federal Reserve will be able to ease up on its aggressive interest rate hikes. 

The U.S. central bank has increased the benchmark lending rate six times this year -- including four consecutive super-sized hikes -- as it tries to quash demand and rein in inflation.

"Market participants are loving this inflation report and the implication that it will encourage the Fed to take a softer approach," said Briefing.com analyst Patrick J O'Hare.

"For now, the market is seeing some inflation light -- and rate-hike light -- at the end of the tunnel," he said.