US stocks rose Tuesday as investors breathed a sigh of relief over a tamer-than-expected inflation report.
The Dow Jones Industrial Average advanced 200 points, or 0.5%. The S&P 500 gained 0.4%, and the Nasdaq Composite climbed 0.6%.
Tuesday’s fresh inflation data release reassured investors, who have feared that President Donald Trump’s broad tariff policies could spike prices in the U.S. economy.
The consumer price index rose 2.7% on an annualized basis in July, while a Dow Jones estimate had called for a 2.8% rise. So-called core CPI, which strips out volatile food and energy prices, increased by 3.1% year on year — slightly more than the expected 3%.
Investors were betting that this inflation report was tame enough for the Federal Reserve to cut interest rates multiple times this year. The market is currently pricing in a nearly 91% chance of a rate cut next month, per trading data from the CME’s FedWatch Tool. That’s up from a 85% chance before the data release. Traders also increased their bets on rate cuts in October and December.
The report comes as traders weigh the latest developments on the tariff front. President Donald Trump said Monday he’d extend a 90-day pause on higher levies on Chinese goods.
BigBear.ai Holdings shares tumbled 32% after the AI-powered decision intelligence solutions provider reported second-quarter results that missed analyst expectations and significantly lowered its full-year revenue guidance.
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