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The prices of stocks went up on Tuesday because new data showed that inflation has slowed down again in May. This made investors more optimistic that the Federal Reserve might not raise interest rates this week.
The Dow Jones Industrial Average went up by 147 points, or 0.4%. The S&P 500 went up by 0.5%, and the Nasdaq Composite went up by 0.5%. The S&P 500 and Nasdaq Composite both reached their highest closing levels since April 2022 on Monday.
A report released on Tuesday showed that the consumer price index (CPI) in May went up by 4% compared to the same time last year. This is the slowest increase in prices since March 2021. After seeing this report, traders became more confident that the Federal Reserve (the Fed) will not raise interest rates on Wednesday. The Fed has been increasing rates for the past 10 meetings, but now there is a 99% chance that they will keep rates steady at the current level of 5% to 5.25%, according to CME Group’s FedWatch tool.
Experts believe that the Fed will likely indicate that there will be at least one more rate hike by the end of 2023, as expected by the market. However, they may choose to skip raising rates for now and observe the impact of the previous 5% rate hikes since the beginning of the rate increase cycle.
Technology company shares performed well as lower inflation and rates increased optimism in the sector. Oracle’s stock jumped 5% after surpassing the expectations of Wall Street for the fourth fiscal quarter. Shares of Netflix and Meta also saw gains of 2.4% and 1.2%, respectively.
On Monday, the S&P 500 and Nasdaq Composite indexes increased by 0.9% and 1.5%, respectively, reaching their highest levels in 13 months. The Dow also rose by 0.56%, adding 189.55 points. The S&P 500 has now increased by over 24% from its lowest point in October, meeting the definition of a bull market.
