NEW YORK: US stocks hit a near two-week high on Tuesday after a softer producer prices data reinforced bets of an interest rate cut by the Federal Reserve in September.
Megacap and growth stocks gained, with Nvidia set to lead the charge for a second session, rising over 5%. The Philadelphia SE Semiconductor Index rose 2.8%, touching a near two-week high.
US producer prices increased less than expected in July as a rise in the cost of goods was tempered by cheaper services, indicating that inflation continued to moderate. In the 12 months through July, the PPI increased 2.2% after climbing 2.7% in June.
“It feels like ‘back to normal’ for markets as tech stocks lead the way higher again following the lower US PPI data. The reading has given heart to beleaguered investors, who remain skittish after last week’s volatility,” said Chris Beauchamp, chief market analyst at IG.
The dollar and the Treasury yields slid after the data, while traders now see a 55% chance of a 50-basis-point rate cut by the US central bank from less than 50% before the report, according to CME’s FedWatch Tool.
Investors now await all-important consumer price (CPI) figures for July on Wednesday and retail sales data on Thursday to firm bets on an aggressive rate cut by the US central bank.
Stocks wobbled on Monday with the S&P 500 nearly flat and the Nasdaq eking out modest gains, following a turbulent week marked by mixed economic reports and a rate hike by Japan’s central bank.
At 11:44 a.m. ET, the Dow Jones Industrial Average rose 213.87 points, or 0.54%, to 39,570.88, the S&P 500 gained 57.83 points, or 1.08%, to 5,402.22 and the Nasdaq Composite gained 294.92 points, or 1.76%, to 17,075.53. Nine of the 11 major S&P sectors were trading higher, with information technology and communication services leading gains.
Energy shares dipped on lower oil prices as OPEC’s move to cut its forecast for demand growth in 2024 tempered fears of supply risks posed by widening conflict in the Middle East.
Starbucks was the top performer on the S&P 500, rising 20.5% and was on track for its biggest one-day percentage gain ever, after the coffee giant appointed Chipotle Mexican Grill’s head Brian Niccol as chairman and CEO. Chipotle dropped 9.6%.
Home Depot reversed losses and climbed nearly 1%. The home improvement chain forecast a decline in annual profit and a bigger drop in its annual comparable sales. BuzzFeed jumped 19.6% after the digital media company narrowed its net loss in the second quarter to $6.6 million from $22.5 million a year earlier.
Investors will look ahead to comments from Atlanta Fed President Raphael Bostic, due at 1:15 p.m. ET, on the outlook for the US economy.