US stocks end higher as inflation data cements bets on rate hike pause
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[June 14, 2023] By
Noel Randewich and Shristi Achar A
(Reuters) - The S&P 500 and Nasdaq reached their highest closes in 14
months on Tuesday after data showed consumer prices rose modestly in
May, boosting bets that the Federal Reserve will not raise interest
rates on Wednesday.
Nvidia jumped 3.9%, becoming the first chipmaker to end a trading
session with a market capitalization above $1 trillion after smaller
rival Advanced Micro Devices gave an update on its artificial
intelligence strategy that failed to impress investors. AMD dropped
3.6%.
Stocks advanced after a U.S. Labor Department report showed the consumer
price index (CPI) rose 0.1% last month following a 0.4% jump in April,
with core inflation unchanged at 0.4%.
On a year-on-year basis, headline inflation increased by a
less-than-estimated 4.0%, reflecting declines in the cost of energy
products and services, including gasoline and electricity.
"If the Fed was looking for data to point to say, 'We're going to pause
in June,' I think they got it today," said Liz Young, head of investment
strategy at SoFi in New York.
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"But it's another one of those that you can cut whichever way you want
to make your case. If you want to be bullish, you say inflation is down
more than 50% since its peak. If you want to be bearish, you can say
inflation is still more than twice the Fed's target," Young said.
Traders have priced in a 93% chance that the U.S. central bank will hold
interest rates at the 5%-5.25% range on Wednesday, and 62% odds of
25-basis-point hike in July, according to the CME Fedwatch tool.
The benchmark S&P 500 has recovered about 22% from its October 2022
closing low, fueled in large part by gains in market heavyweights such
as Apple Inc, Nvidia Corp and Tesla Inc. More recently, sectors such as
energy and materials have climbed, as well as small-cap stocks.
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Traders work on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., May 4, 2023.
REUTERS/Brendan McDermid
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U.S.-listed shares of Chinese companies rose after China's central
bank lowered its short-term lending rate for the first time in 10
months. Alibaba Group gained 1.9% and JD.com jumped 3.5%.
The S&P 500 climbed 0.69% to end the session at 4,369.01 points.
The Nasdaq gained 0.83% to 13,573.32 points, while Dow Jones
Industrial Average rose 0.43% to 34,212.12 points.
Volume on U.S. exchanges was relatively heavy, with 11.6 billion
shares traded, compared to an average of 10.6 billion shares over
the previous 20 sessions.
Ten the 11 S&P 500 sector indexes rose, led by materials, up 2.33%,
followed by a 1.16% gain in industrials.
The small-cap Russell 2000 index jumped 1.2% to a three-month high.
Intel Corp gained 2.5% after a report the chipmaker is in talks with
SoftBank Group Corp's Arm to be an anchor investor in its initial
public offering.
Bunge Ltd rallied 2.5% after the U.S. grains merchant and Glencore-backed
Viterra said they were merging to create an agricultural trading
giant worth about $34 billion, including debt.
The most traded stock in the S&P 500 was Tesla Inc, with $40.8
billion worth of shares exchanged during the session. The shares
rose 3.55%.
Advancing issues outnumbered falling ones within the S&P 500 by a
4-to-1 ratio.
The S&P 500 posted 43 new highs and no new lows; the Nasdaq recorded
135 new highs and 47 new lows.
(Reporting by Shristi Achar A and Sruthi Shankar in Bengaluru, and
by Noel Randewich in Oakland, California; Editing by Vinay Dwivedi,
Richard Chang and Lisa Shumaker)
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