- US stocks rallied on falling inflation data from the producer price index report.
- Investors are hoping for signs of a further cooling in Wednesday’s consumer price index.
- Starbucks rose 23% on Tuesday after it announced that Chipotle boss Brian Niccol would be the new CEO.
U.S. stocks jumped on Tuesday as investor confidence was boosted by signs of weaker inflation.
The Bureau of Labor Statistics reported that the producer price index rose 0.1 percent in July, missing expectations for a 0.2 percent increase. Year-on-year, prices rose 2.3 percent, a slowdown from June.
This gave the stock indices a new boost. The S&P 500 and the Nasdaq rose by 1.7 percent and 2.4 percent respectively. The Dow climbed to almost 400 points.
Investors will now be watching for further disinflationary signals in Wednesday’s consumer price index report. According to data from the CME Fedwatch tool, a majority of traders expect the Federal Reserve to cut interest rates by 50 basis points next month.
“The Fed can cut rates in September,” said Jamie Cox, managing partner at Harris Financial Group. “If the data holds, the Fed will have plenty of room to cut rates further this year.”
As for concerns about U.S. economic growth, markets will get a clearer picture from Thursday’s retail sales data. Bank of America expects the data to show healthy spending that will help the country avoid a recession.
Starbucks led the way among the biggest stock gainers on Tuesday, rising 23 percent on news that Chipotle CEO Brian Niccol would take over as head of the coffee chain. Chipotle shares fell as low as 14 percent, but then recovered slightly.
Here you can see the US indices at the close of trading on Tuesday at 4:00 p.m.:
Here’s what else happens:
For commodities, bonds and cryptocurrencies:
- Oil futures were slightly down. West Texas Intermediate crude oil fell 2.24 percent to $78.27 per barrel. Brent crude oil, the international benchmark, fell 2.04 percent to $80.62 per barrel.
- Gold prices fell slightly by 0.3% to $2,465 per ounce.
- The yield on 10-year government bonds fell six basis points to 3.848%.
- Bitcoin rose 2.37% to $60,746.
