WASHINGTON (AP) — US consumer inflation slowed again to 6.5% over past 12 months, easing some pressure on households and the economy, according to the Consumer Price Index report for December.

This report on U.S. inflation is viewed as an indicator of whether Wall Street’s recent rising optimism is warranted or overdone.

On Wall Street on Wednesday ahead of the report, the S&P 500 climbed 1.3% and the Dow industrials rose 0.8%. The Nasdaq composite gained 1.8%.

Stocks began 2023 with gains driven by hopes that cooling inflation and a slowing economy may lead the Federal Reserve to ease off its steep interest rate hikes. Such increases can help stamp out high inflation, but they also slow the economy and raise the risk of a recession while hurting prices for stocks and other investments.

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