Stocks experienced a climb on Tuesday as a result of a milder inflation reading, reinforcing Wall Street’s belief that the Federal Reserve will abstain from raising interest rates this week.

The S&P 500 reached its highest level since April 2022, rising by 30.08 points or 0.7% to reach 4,369.01.

The Dow Jones Industrial Average also saw gains, with an increase of 145.79 points or 0.4% to reach 34,212.12. Additionally, the Nasdaq composite rallied by 111.40 points or 0.8% to reach 13,573.32.

The optimism in the U.S. stock market stems from the expectation that the economy can steer clear of a severe recession and that inflation will decline sufficiently for the Federal Reserve to ease its approach to rate hikes, the Associated Press has reported.

The latest report indicated a 4% year-on-year increase in prices for consumers, encompassing food, fuel, and other categories, marking a deceleration from the peak of 9.1% inflation witnessed last summer.

In response to the data, traders promptly amplified their bets that the Federal Reserve will announce no changes to interest rates during Wednesday’s meeting.

If this occurs, it would be the first time in over a year that the Fed refrains from hiking rates.

Written by staff