Stocks rise: CPI for May grew at slowest annual rate since Mar' 21

Stocks rise: CPI for May grew at slowest annual rate since Mar’ 21

Stocks rose Tuesday after new inflation data showed price pressures slowed again in May, adding to investor optimism that the Federal Reserve could skip a rate hike when it next decides on policy this week.

The Dow Jones Industrial Average traded 145.79 points higher, or 0.43 per cent, to close at 34,212.12. The S&P 500 added 0.69 per cent to close at 4,369.01, and the Nasdaq Composite advanced 0.83 per cent to 13,573.32.

The S&P 500 and the Nasdaq notched fresh 13-month highs during Tuesday’s session. Both indexes each reached their highest closing levels since April 2022 on Monday. Currently, the broad-market index is up about 25 per cent from its October low, surpassing the simplistic definition of a bull market.

May’s consumer price index increased 4 per cent year over year, marking the slowest annual rate since March 2021. Following the report, traders increased their bets that the Fed will keep rates unchanged on Wednesday after hiking at 10 consecutive meetings. The latest odds gave a roughly 91 per cent chance the central bank would keep rates at the current target rate of 5 per cent to 5.25 per cent, according to CME Group’s FedWatch tool.

Tech shares led the way as easing inflation and rates boosted optimism for the sector. Oracle shares jumped 0.2 per cent a day after the software vendor topped Wall Street’s estimates for the fiscal fourth quarter. Shares of streaming giant Netflix climbed 2.8 per cent.

Nvidia, a leading chip maker, achieved a significant milestone on Tuesday as its shares closed with a market capitalization exceeding $1 trillion for the first time ever. The company's stock rose 3.9 per cent to reach $410.22 per share, resulting in a market cap of $1.01 trillion.

According to Dow Jones Market Data, Nvidia needed to finish the day at or above $404.858 to surpass the $1 trillion mark. This accomplishment coincided with an overall uptick in the chip industry, as an index of chip stocks also saw gains.

Tesla CEO Elon Musk announced at an energy conference in Austin, Texas, that the company expects to begin producing its new electric semi trailer truck in larger volumes by the end of next year due to battery-supply constraints, emphasising the importance of the truck in Tesla's transition to sustainable energy and urging energy providers to invest in more power generation to meet the rising demand for electric vehicles.

Overall, all US sectors except Utilities closed higher overnight. Materials was the best performer, closing higher by over 2 per cent.

Futures

The SPI futures are pointing to a 0.6 per cent gain.

Currency

One Australian dollar at 7:20 AM was buying 67.66 US cents.

Commodities

Iron ore futures are pointing to a 1.45 per cent gain.

Gold lost 0.56 per cent. Silver fell 0.99 per cent. Copper gained 2.11 and oil jumped 3.43 per cent.

Figures around the globe

Across the Atlantic, European markets closed higher. London’s FTSE added 0.32 per cent, Frankfurt gained 0.82 per cent while Paris closed 0.56 per cent higher.

In Asian markets, Tokyo’s Nikkei added 1.80 per cent, Hong Kong’s Hang Seng was up 0.60 per cent while China’s Shanghai Composite closed 0.15 per cent higher.

Yesterday, the Australian sharemarket closed 0.23 per cent higher at 7138.

Ex-dividends

KMD Brands (ASX:KMD) is paying 2.3679 cents fully franked

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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