By Abigail Summerville
(Reuters) – U.S. stocks hit a near two-week high on Tuesday after weaker producer price data reinforced bets for a Federal Reserve interest rate cut in September.
US producer prices rose less than expected in July as rising goods costs were offset by lower service prices, indicating inflation continued to moderate. In the 12 months through July, the PPI rose 2.2% after rising 2.7% in June.
Investors are now looking to key July consumer price figures due on Wednesday and retail sales data on Thursday to confirm their bets on an aggressive rate cut by the US central bank.
“The core PPI number reinforces the idea that the Fed has done an excellent job of keeping inflation relatively under control and that the most likely course of action will be a rate cut sooner rather than later,” said Michael James, managing director of equity trading at Wedbush Securities.
“The CPI will be released tomorrow morning. Any data will have a huge influence on the market because people are very nervous at the moment.”
Traders now see a 55% chance the U.S. central bank will cut rates by 50 basis points, up from less than 50% before the report, according to CME's FedWatch tool.
stocks stumbled on Monday, with the index almost unchanged and the Nasdaq eking out modest gains, after a turbulent week marked by mixed economic reports and a rate hike by Japan's central bank.
At 2:30 p.m. ET, the index was up 342.66 points, or 0.87%, at 39,699.67, the S&P 500 gained 78.22 points, or 1.46%, to 5,422.61 and the U.S. Composite was up 370.83 points, or 2.21%, at 17,151.44.
Ten of the 11 major S&P sectors were trading higher, with information technology and consumer discretionary leading the gains.
Energy stocks fell on lower oil prices as OPEC's decision to cut its 2024 demand growth forecast eased fears of supply risks posed by escalating conflict in the Middle East. (O/R)
Starbucks (NASDAQ:) was the best-performing stock in the S&P 500, rising 21.71% and on track for its biggest daily percentage gain in history, after the coffee giant appointed Chipotle Mexican Grill (NYSE:) boss Brian Niccol as president and CEO.
Chipotle fell 7.43%.
House deposit (NYSE:) reversed losses and rose 1.7%. The home goods chain forecast a decline in annual profit and a larger drop in annual comparable sales.
BuzzFeed rose 19.6% after the digital media company narrowed its second-quarter net loss to $6.6 million from $22.5 million a year earlier.
Advancing stocks outnumbered declining stocks by a ratio of 3.74 to 1 on the New York Stock Exchange and 2.49 to 1 on the Nasdaq.
The S&P 500 posted 17 new 52-week highs and three new lows, while the Nasdaq Composite posted 48 new highs and 115 new lows.
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