Inflation Plunges Most Since 2009, Stoking Hope of New Bull Market
• Inflation fell by the largest amount since 2009, dropping 4.5 percentage points from 8% in 2022 to 3.5% in 2023. This triggered a stock market rebound.
• The last time inflation fell so rapidly was in 2009, which kicked off a 9-year bull run for stocks. Low rates and quantitative easing drove growth.
• Interest rates are expected to fall in 2024 as inflation moves toward the Fed's 2% target. Lower rates could further boost stocks.
• There is historical precedent for declining inflation driving a multi-year bull market, as seen in the 1980s.
• Geopolitical conflicts could still affect energy prices and inflation, so the path forward depends on inflation falling to 2%.