U.S. stocks reached a two-week high Tuesday as softer producer prices fueled expectations of a September Federal Reserve rate cut.
Megacap and growth stocks, led by Nvidia’s 5% rise, surged, while the Philadelphia Semiconductor Index gained 2.8%.
U.S. producer prices rose less than expected in July; while goods prices increased, cheaper services helped moderate inflation to 2.2%.
“It feels like ‘back to normal’ for markets as tech stocks lead the way higher again following the lower U.S. 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 Treasury yields fell, while traders now estimate a 55% chance of a 50-basis-point rate cut.
Investors now anticipate July’s CPI figures on Wednesday and retail sales Thursday to solidify expectations for a U.S. rate cut.
Stocks fluctuated Monday; the S&P 500 remained flat, while the Nasdaq posted modest gains after a volatile week with mixed economic data and Japan’s rate hike.
By 11:44 a.m. ET, the Dow rose 213 points, the S&P 500 gained 58 points, and Nasdaq added 295 points.
Nine of the 11 major S&P sectors rose, with information technology and communication services leading the gains.
Energy shares dipped due to lower oil prices, as OPEC’s demand growth cut eased Middle East supply risk fears.
Starbucks led the S&P 500 with a 20.5% rise after appointing Brian Niccol as CEO, nearing its largest one-day gain.
Chipotle dropped 9.6%.
Home Depot reversed losses, climbing nearly 1%, but forecasts a decline in annual profit and a larger drop in sales.
BuzzFeed surged 19.6% as it reduced its Q2 net loss to $6.6 million from $22.5 million last year.
Investors will anticipate insights from Atlanta Fed President Raphael Bostic at 1:15 p.m. ET regarding the U.S. economic outlook.
Advancing issues surpassed decliners 2.98-to-1 on the NYSE and 2.19-to-1 on Nasdaq.
The S&P 500 saw 14 new highs and 3 lows, while the Nasdaq Composite had 45 highs and 98 lows.
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