NEW YORK: The S&P 500 and Nasdaq reached their highest closes in 14 months on Tuesday (June 13) after data showed consumer prices rose modestly in May, boosting bets that the Federal Reserve (Fed) will not raise interest rates on Wednesday.
The S&P 500 climbed 0.69% to end the session at 4,369.01 points.
The Nasdaq gained 0.83% to 13,573.32 points, while Dow Jones Industrial Average rose 0.43% to 34,212.12 points.
Nvidia jumped 3.9%, becoming the first chipmaker to end a trading session with a market capitalisation above US$1 trillion (RM4.6 trillion) after smaller rival Advanced Micro Devices gave an update on its artificial intelligence strategy that failed to impress investors. AMD dropped 3.6%.
Stocks advanced after a US Labor Department report showed the consumer price index (CPI) rose 0.1% last month following a 0.4% jump in April, with core inflation unchanged at 0.4%.
On a year-on-year basis, headline inflation increased by a less-than-estimated 4%, reflecting declines in the cost of energy products and services, including petrol and electricity.
“If the Fed was looking for data to point to say, ‘We’re going to pause in June,‘ I think they got it today,” said Liz Young, head of investment strategy at SoFi here.
“But it’s another one of those that you can cut whichever way you want to make your case. If you want to be bullish, you say inflation is down more than 50% since its peak. If you want to be bearish, you can say inflation is still more than twice the Fed’s target,” she said.
Traders have priced in a 93% chance that the US central bank will hold interest rates at the 5%-5.25% range on Wednesday, and 62% odds of 25-basis-point hike in July, according to the CME Fedwatch tool.
The benchmark S&P 500 has recovered about 22% from its October 2022 closing low, fuelled in large part by gains in market heavyweights such as Apple Inc, Nvidia Corp and Tesla Inc. More recently, sectors such as energy and materials have climbed, as well as small-cap stocks.
“One of the key themes of this rally has been that it’s been very narrow, that it was just a few stocks,” said Steve Sosnick of Interactive Brokers.
“Investors are now starting to look outside of just the tech stocks. Investors are looking at places to rotate into other sectors that might be earning money,“ he added.
US-listed shares of Chinese companies rose after China’s central bank lowered its short-term lending rate for the first time in 10 months. Alibaba Group gained 1.9% and JD.com jumped 3.5%. – Reuters, AFP