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NEW YORK — U.S. stocks rose to record levels again on Tuesday, led by technology companies, as some of Wall Street’s most powerful companies regained their footing.
The S&P 500 rose 1.1%, surpassing its all-time high set last week. The Dow Jones Industrial Average rose 235 points, or 0.6%, and the Nasdaq Composite Index rose 1.5%.
All three indexes started the day lower after a much-anticipated inflation report showed that U.S. consumers paid slightly higher prices last month than economists expected. The door remained closed as worse-than-expected economic data raised hopes that the Federal Reserve would be able to deliver its long-awaited rate cut at next week’s meeting.
But inflation data remained close to expectations, and traders held out hope that a long-term downward trend would mean the Fed would begin its expected rate cuts in June. This allowed stock indexes to recover their losses as the day progressed.
Moreover, the actual rate of inflation may not be as high as the morning report suggested.
“January and February are notoriously volatile months for many economic indicators,” said Brian Jacobsen, chief economist at Annex Wealth Management.
“The Fed was not planning to cut rates next week, and this report doesn’t change that. The discussion around the table will be about longer-term trends.”
The fear is that “sticky” inflation that won’t let up will force the Fed to keep interest rates high, putting pressure on the economy and investment prices. The Fed’s key interest rate is already at its highest level since 2001.
“Another better-than-expected CPI data may breathe new life into the story of persistent inflation, but will it actually delay a rate cut,” said Chris Larkin, managing director of trading and investments at Morgan Stanley E-Trade. Whether or not that’s the case is another matter.” .
Wall Street traders have spent the past few months trying to predict the timing of a rate cut ahead of the Federal Reserve. They are already pushing up stock prices and lowering bond yields in anticipation of that.
Through all of this, Larkin said, the Fed has “consistently done what it said it would do.” “Until they say otherwise, their plan is to cut rates in the second half of this year.”
Nevertheless, the immediate reaction across financial markets to inflation statistics was halted and uncertain.
In the bond market, U.S. Treasury yields initially fell, but then rose. The 10-year Treasury yield finally rose to 4.15% from 4.10% late Monday.
The price of gold, which has soared to a record high due to expectations for future interest rate cuts, also fluctuated. One ounce for April delivery fell $22.50 to settle at $2,166.10. Meanwhile, the nervousness of US stock investors has eased by more than 8% after several ups and downs.
On Wall Street, big technology stocks carried most of the market’s heaviest weight. Oracle rose 11.7% after the company said its latest quarterly profit beat analysts’ expectations.
Nvidia also rose 7.2%, recovering from a rare two-day slump. Wall Street’s frenzy over its artificial intelligence technology has sent the company’s stock price soaring, making it one of the most powerful companies on the market. This was the single strongest force pushing the S&P 500 up on Tuesday.
New York Community Bancorp rose 5.8% after it said it had entered into a previously announced agreement to raise about $1.05 billion in cash through a stock sale. The bank has struggled under the weight of falling commercial real estate prices and growing pains from previous acquisitions. The issue also raises concerns about the broader local banking industry.
3M rose 5% after Bill Brown, former chairman and CEO of L3Harris Technologies, announced he would become CEO of the company in early May.
Among the losers on Wall Street was Southwest Airlines. The index fell 14.9% after cutting forecasts for a key measure of revenue for the first three months of this year, in part due to lower-than-expected air usage by some leisure travelers.
Boeing also announced that it has informed the company that it will deliver fewer aircraft this year than expected. Shares of Boeing, which has faced criticism over safety and manufacturing quality, fell 4.3%.
Overall, the S&P rose 57.33 points to 5,175.27. The Dow rose $235.83 to $39,005.49, and the Nasdaq rose $246.36 to $16,256.64.
In overseas stock markets, Japan’s Nikkei Stock Average fell 0.1%, further retreating from recent records. Expectations are rising that the country’s central bank will raise interest rates below zero.
The index rose 3.1% in Hong Kong, 1.2% in Frankfurt and 1% in London, but was less volatile elsewhere in Asia and Europe.
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AP Business Writers Elaine Kurtenbach and Matt Ott contributed.
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