Aug 13 (Reuters) - U.S. stocks hit a near two-week high on Tuesday after softer producer prices data reinforced bets of an interest-rate cut by the Federal Reserve in September.
U.S. producer prices increased less than expected in July as a rise in the cost of goods was tempered by cheaper services, indicating that inflation continued to moderate. In the 12 months through July, the PPI increased 2.2% after climbing 2.7% in June.
Investors now await all-important consumer-price figures for July on Wednesday and retail sales data on Thursday to firm bets on an aggressive rate cut by the U.S. central bank.
“The core PPI number furthers the narrative that the Fed has done an excellent job of keeping inflation relatively under control and that the more likely move is going to be a rate cut sooner rather than later,” said Michael James, managing director of equity trading at Wedbush Securities.
“You have the CPI print tomorrow morning. Any data point is going to have an outsized influence on the market because people are so jittery right now.”
Traders now see a 55% chance of a 50-basis-point rate cut by the U.S. central bank, from less than 50% before the report, according to CME's FedWatch Tool.
Stocks wobbled on Monday with the S&P 500 (.SPX), nearly flat and the Nasdaq (.IXIC), eking out modest gains, following a turbulent week marked by mixed economic reports and a rate hike by Japan's central bank.
At 2:30 p.m. ET, the Dow Jones Industrial Average (.DJI), rose 342.66 points, or 0.87%, to 39,699.67, the S&P 500 (.SPX), gained 78.22 points, or 1.46%, to 5,422.61 and the Nasdaq Composite (.IXIC), gained 370.83 points, or 2.21%, to 17,151.44.
Traders work on the floor of the NYSE in New York
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., August 8, 2024. REUTERS/Brendan McDermid/File Photo Purchase Licensing Rights
Ten of the 11 major S&P sectors were trading higher, with information technology (.SPLRCT), and consumer discretionary (.SPLRCD), leading gains.
Energy shares (.SPNY), dipped on lower oil prices as OPEC's move to cut its forecast for demand growth in 2024 tempered fears of supply risks posed by widening conflict in the Middle East.
Starbucks (SBUX.O), was the top performer on the S&P 500, rising 21.71% and was on track for its biggest one-day percentage gain ever, after the coffee giant appointed Chipotle Mexican Grill's (CMG.N), head Brian Niccol as chairman and CEO.
Chipotle dropped 7.43%.
Home Depot (HD.N), reversed losses and climbed 1.7%. The home-improvement chain forecast a decline in annual profit and a bigger drop in its annual comparable sales.
BuzzFeed (BZFD.O), opens new tab jumped 19.6% after the digital media company narrowed its net loss in the second quarter to $6.6 million from $22.5 million a year earlier.
Advancing issues outnumbered decliners by a 3.74-to-1 ratio on the NYSE and by a 2.49-to-1 ratio on Nasdaq.
The S&P 500 posted 17 new 52-week highs and three new lows, while the Nasdaq Composite recorded 48 new highs and 115 new lows.
Reporting by Abigail Summerville in New York; Editing by Rod Nickel
