US stock indices rose during Tuesday’s trading as markets assessed last month’s inflation data and its impact on the Federal Reserve’s monetary policy.
Government data revealed that the annual growth rate of the US consumer price index held steady at 2.7% in July, below expectations for an increase to 2.8%.
Core inflation – which excludes volatile food and energy prices – rose to 3.1% in July, higher than expectations of a 3% increase, and compared to 2.9% in June.
According to the FedWatch tool, investors now see a 94% probability of a 25-basis-point rate cut in September, compared to 86% yesterday and 57% a month ago.
Analysts also project a 61% probability of another 25-basis-point cut in October, compared to 34% a month ago, along with a 51% probability of a similar cut in December, compared to 25% a month ago.
As for trading, by 16:52 GMT the Dow Jones Industrial Average rose 1% (450 points) to 44,415 points, the broader S&P 500 gained 0.8% (51 points) to 6,424 points, while the Nasdaq Composite climbed 0.9% (198 points) to 21,583 points.
