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Wall Street closed higher on Tuesday as cooling CPI data strengthened expectations of steady interest rates. The Nasdaq Composite, the Dow and the S&P 500 ended in positive territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.02%, or 10.02 points, to close at 52,508.66. Ten components of the 30-stock index ended in positive territory, and 20 ended in negative territory.
The tech-heavy Nasdaq Composite advanced 0.9% or 233.83 points, to close at 26,107.01.
The S&P 500 gained 0.4% to end at 7,543.89. Out of the 11 broad sectors of the broad-market index, six ended in positive territory, while five were in negative territory. The Information Technology Select Sector SPDR (XLK), the Communication Services Select Sector SPDR (XLC) and the Energy Select Sector SPDR (XLE) rose 1.3%, 1.1% and 0.4%, respectively, while the Health Care Select Sector SPDR (XLV) fell 1.9%.
The fear gauge, the CBOE Volatility Index (VIX), decreased by 3.9% to 16.50. A total of 16.38 billion shares were traded on Tuesday, lower than the last 20-session average of 21.66 billion. Advancing issues outnumbered decliners by a 1.78-to-1 ratio on the NYSE. On the Nasdaq, advancers outpaced decliners by a 1.26-to-1 ratio.
June Inflation Cools Ahead of Fed Meeting
The Department of Labor reported that consumer price inflation (CPI), a broad measure of prices paid by households, cooled more than expected in June. The headline CPI fell 0.4% in June from 0.5% in May. The Zacks Consensus Estimate was for a decrease of 0.2%.
The fall in headline CPI was due to a 5.7% drop in energy prices, led by a 9.7% fall in gasoline prices. Year over year, the headline CPI increased 3.5% in June. The metric for May was 4.2%.
Core CPI (excluding volatile food and energy items) was unchanged in June, following a 0.2% increase in May. The Zacks Consensus Estimate was 0.1%. Year over year, core CPI increased 2.6% in June compared with 2.9% in May.
The cooling inflation data reinforced market expectations that the Federal Reserve will leave its benchmark interest rate unchanged at 3.50-3.75% at the July meeting. According to CME FedWatch, traders are pricing in an 84.5% probability that the Fed will leave rates unchanged this month.
Helping the broader market on Tuesday were technology stocks. Shares of Dell Technologies Inc. DELL gained 7.1%. Dell currently carries a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
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