The US stock market rallied to records on Tuesday as investors expected data showing inflation was lower than predicted, giving the Federal Reserve leeway to cut interest rates in September.
The S&P 500 rose 1.1% to top its all-time high set two weeks ago, while the Dow Jones Industrial Average climbed 483 points and the Nasdaq composite jumped 1.4%. The news pushed traders to increase bets on a rate cut, with a 94% chance of it happening in September.
Lower interest rates would boost investment prices and stimulate the economy by making borrowing cheaper for households and businesses. However, some economists warned that more twists in upcoming data could complicate the Fed’s decision-making process.
The report showed US consumers paid 2.7% higher prices for groceries, gasoline, and other costs of living, lower than expected inflation. The underlying measure of inflation hit its highest point since early this year, causing up-and-down swings in Treasury yields.
President Trump’s comments on tariffs had also affected market expectations, with some stocks rising after he praised a company’s CEO. However, not all stocks performed well, with Celanese and Cardinal Health experiencing losses despite reporting better-than-expected profits.
The global stock markets also saw movement, with indexes in China and Japan edging up after Trump signed an executive order to delay tariffs on China. The yield on the 10-year Treasury rose to 4.28%, while the yield on the two-year Treasury fell to 3.73%.
Source: https://apnews.com/article/stock-markets-inflation-trump-china-3b9c602e05756778028b70f97e15ccb2