U.S. stocks surged Tuesday after the latest consumer price report showed inflation may be cooling.

The Labor Department's Consumer Price Index rose just 0.1% in November and increased 7.1% from last year, falling short of estimates predicting respective gains of 0.3% and 7.3%.

The technology-heavy Nasdaq Composite Index jumped more than 2% in early trading Tuesday. The Dow Jones Industrial Average gained 265 points after the release of the report.

The index measures the change in prices paid by consumers for a wide array of goods and services. The estimates come from economists polled by Dow Jones.

The report showed a decrease in energy prices, significantly contributing to the stability seen in the overall index, managing to overcome a continued trend of rising food prices, which rose 0.5%.

In comparison to November 2021, food prices were up 10.6%, while the energy index rose by 13.1%.

The overall increase from a year ago is tied for the lowest it has been since November 2021, despite sitting well above the 2% threshold the Federal Reserve uses to gauge healthy inflation levels.

Core-CPI, which excludes volatile food and energy pricing, measured a 0.2% monthly increase in November. If the year had ended in November, core-CPI would have indicated a 6% increase instead of the 6.3% rate measure in October.

Following the report's release, Federal Reserve officials are expected to convene to analyze the data that will guide them in deciding whether further monetary restrictions should be put in place. The Federal Open Market Committee is expected to announce a 0.50% interest rate increase when in meets Wednesday and Thursday.

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