Stocks rose Tuesday after the release of new U.S. inflation data, while traders awaited a key Federal Reserve policy decision.
The Dow Jones Industrial Average climbed 103.60 points, or 0.3%, to 34,108.64. The S&P 500 added 0.73% to 4,019.65. The Nasdaq Composite rose 1.01% to 11,256.81.
Earlier in the session, the Dow was up as much as 707.24 points, or 2.08%. The S&P 500 advanced 2.77%, while the Nasdaq gained 3.84%.
Stocks initially rallied after the consumer price index showed an increase of just 0.1% from the previous month, and a gain of 7.1% from a year ago, the Labor Department reported Tuesday. Economists surveyed by Dow Jones had been expecting a 0.3% monthly increase and a 7.3% rise over the past 12 months. Excluding volatile food and energy prices, so-called core CPI rose 0.2% on the month and 6% on an annual basis, compared to respective estimates of 0.3% and 6.1%.
However, major indexes came off their best levels as the day continued.
Investors are anticipating the Federal Reserve’s next rate-hiking decision at the conclusion of its two-day policy meeting on Wednesday. Traders are largely pricing in a 50-basis point increase, a slight decline from the previous four hikes. (One basis point equals 0.01%.)
“While the inputs of inflation coming into that Fed meeting are modestly better, we still don’t know for sure if the Fed’s going to raise by 50 basis points, if they’re going to raise their terminal rate. So, we have quickly shifted gears into a mode of ‘wait and see’ for the Fed meeting tomorrow,” said Art Hogan, chief market strategist at B. Riley Wealth.
The 10-year Treasury yield slipped after the CPI report and touched a low of 3.421%. Energy stocks led the gains, with shares of Chevron the leading outperformer in the Dow.
Tech stocks that have been hit the hardest from rising inflation and rates in 2022, also rose. Shares of Meta and Google-parent Alphabet were up 4.7% and about 2.5%, respectively.
