NEW YORK: US stocks ended solidly higher on Wednesday (July 12), led by a gain of more than 1% in the Nasdaq after a report showed inflation subsided further with consumer prices registering their smallest annual increase in more than two years.
The data underscored expectations the Federal Reserve (Fed) may let interest rates stand after one more 25 basis point increase expected at its July policy meeting.
The Dow Jones Industrial Average rose 86.01 points, or 0.25%, to 34,347.43, the S&P 500 gained 32.9 points, or 0.74%, to 4,472.16 and the Nasdaq Composite added 158.26 points, or 1.15%, to 13,918.96.
Shares of big tech-related companies, which tend to be sensitive to higher interest rates, gave the S&P 500 its biggest boost. The technology sector was up 1.3%
In the 12 months through June, the Consumer Price Index (CPI) advanced 3%. That was the smallest year-on-year increase since March 2021 and followed a 4% rise in May.
“The outlook for inflation is soft enough that the Fed’s expected rate hike in July will be the last one for the cycle,“ said LBBW’s Karl Haeling, who observed a rush of investors into stocks.
“People are losing money if they sit on the sidelines,” he said.
Indices eased off their early highs by late afternoon, but “bulls remain firmly in charge”, said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
“Clearly the CPI data we got was what the bulls wanted to see, and those that have been sitting on the sidelines hoping for a pullback continue to get frustrated.”
Investors have been weighing how much longer the Fed will need to raise rates to curb inflation.
The Cboe Volatility Index, Wall Street's fear gauge, eased.
The Labor Department report also showed the smallest monthly gain in underlying consumer prices since August 2021.
“The market is sensing the Fed is getting closer and closer to that final one and done,” said Quincy Krosby, chief global strategist at LPL Financial in North Carolina.
Investors also digested news that US Treasury Secretary Janet Yellen’s trip to China has raised hopes in Beijing that tariffs on Chinese imports may be eased.
Elsewhere, the Fed’s latest “beige book” pointed to improved activity since late May, with robust tourism and travel fuelling growth.
Among individual companies, Nvidia jumped 3.5% following reports that it is in talks to invest in Arm, a Softbank-backed semiconductor company.
Meta Platforms gained 3.7% on bullish sentiment regarding its Threads social media platform’s ability to attract advertisers. Meta launched the Instagram program last week.
Domino'’s Pizza surged 11.1% after announcing a global agreement with Uber, to have meals delivered through the Uber Eats and Postmates apps. Uber shares rose 0.4%. – Reuters, AFP
Source: The Sun Daily
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