Stocks are opening sharply higher on Wall Street after the government reported that inflation slowed dramatically last month. The S&P 500 jumped 2.5% in the early going Tuesday and the tech-heavy Nasdaq composite rose 3.3%. Treasury yields also fell sharply following the report showing that consumer prices rose 7.1% in November from a year ago, down from 7.7% in October and a recent peak of 9.1% in June. It was the fifth straight slowdown. The encouraging data on inflation cements investors’ expectations the Federal Reserve will ease up on its aggressive hikes to interest rates. The Fed’s next decision arrives Wednesday.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Wall Street futures jumped Tuesday after the government released its consumer prices report showing that inflation slowed more in November than analysts had expected.

Futures for the Dow climbed 2.2% — or more than 700 points — and futures for the S&P 500 rose 2.7% before the bell.

The government said Tuesday that consumer prices rose 7.1% in November from a year ago, down from 7.7% in October and a recent peak of 9.1% in June. It was the fifth straight slowdown and investors cheered the news, immediately sending markets sharply higher before the open just as the Federal Reserve get ready to hold their last policy meeting of 2022.

Economists had forecast that inflation slowed to 7.3% last month from 7.7% in October.

On a month-to-month basis, the consumer price index rose just 0.1% in November, down from 0.4% in October.

Markets have struggled this year thanks to high inflation and the interest rate hikes engineered to combat it. Higher rates slow business activity by design but also risk causing a recession if they go too high, all while dragging down prices of investments.

Policymakers at the Federal Reserve begin a meeting Tuesday. When it wraps up Wednesday, investors expect the central bank to announce its last rate hike of the year. Most analysts and economists expect a half-point hike by the Fed, less than the three-quarters of a point the Fed has issued at its last four meetings.

Each of those was triple the Fed’s usual move, and they lifted the central bank’s key overnight rate to a range of 3.75% to 4%. It started the year at virtually zero.

Economists at Goldman Sachs expect Fed policy makers on Wednesday to signal their median expectation is for rates eventually to hit a range of 5% to 5.25%.

Even if inflation is waning, the global economy still faces threats from the rate increases already pushed through. The housing industry and other businesses that rely on low interest rates have shown particular weakness, and worries are rising about the strength of corporate profits broadly.

Besides raising short-term rates, the Fed is also making other moves with its vast trove of bond investments that should effectively allow longer-term yields to rise.

Other central banks around the world, including the European Central Bank, are also likely to raise their own rates by half a percentage point this week.

In Europe at midday, Germany's DAX edged up 0.2%, while the CAC 40 in Paris added less than 0.1%. London's FTSE 100 edged up 3 points.

In Asian trading, Tokyo’s Nikkei 225 rose 0.4% to 27,961.66 while the Hang Seng in Hong Kong gained 0.5% to 19,559.93. Australia’s S&P/ASX 200 picked up 0.3% to 7,203.30.

In Seoul, the Kospi shed 0.3% to 2,366.89. The Shanghai Composite index was flat at 3,179.71. Shares fell in India and Taiwan but rose in Singapore and Bangkok.

The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, slipped to 3.48%. The two-year yield, which tends to more closely track expectations for the Fed, slid to 4.2% from 4.34%.

U.S. benchmark crude added $1.36 to $74.53 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the basis for pricing for international trading, picked up $1.52to $79.51 per barrel.

Last week, crude prices scraped their lowest levels of the year on worries about a weakening global economy, which would mean less demand for energy.

In currency dealings, the dollar fell to 135.14 Japanese yen. The euro climbed to $1.0654 from $1.0534.

On Wall Street on Monday, the S&P 500 rallied 1.4% while the Dow Jones Industrial Average added 1.6%. The Nasdaq climbed 1.3% and the Russell 2000 gained 1.2%

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Kurtenbach reported from Bangkok; Ott reported from Washington.

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