US stocks rose after weak inflation data boosted the Federal Reserve’s hopes of a halt

Wall Street stocks rose on Tuesday after U.S. inflation slowed to its lowest pace in more than two years, boosting investor bets that the Federal Reserve will not raise interest rates this week.

The benchmark S&P 500 rose 0.6 percent, pushing up into the bull market territory it entered last week. The Nasdaq Composite Heavy Index added 0.6 percent.

The latest U.S. Consumer Price Index report showed that headline inflation slowed to 4 percent year-on-year in May, down from 4.9 percent in the previous month, marking its lowest level since March 2021. The figure was slightly lower than the forecast of economists who were quoted. poll their opinions. By Reuters.

James Knightley, chief international economist at ING, said the data “should reinforce expectations that the Fed will keep interest rates unchanged tomorrow, but comments about the decision are likely to remain hawkish.”

Markets were expecting a 92 percent chance that the Fed will keep interest rates steady on Wednesday, according to data compiled by Refinitiv and based on interest rate derivatives prices.

“The consensus view is that inflation is on a downward trajectory, the economy is slowing but not deflation, and the Fed will pause and reassess in July,” said Mike Zygmont, head of research and trading at Harvest Volatility.

The dollar, which weakens when investors expect lower interest rates, lost 0.3 percent against a basket of six peer currencies.

The yield on two-year US Treasury bonds, which is more sensitive to monetary policy expectations, rose 0.08 percentage point to 4.67 percent, while the yield on 10-year Treasury notes added 0.05 percentage point to 3.81 percent. Bond yields rise as prices fall.

The moves come a day after the S&P 500 and Nasdaq hit 14-month highs.

In Europe, both the regional Stoxx 600 and the French CAC 40 ended the day up 0.6 percent, while Germany’s DAX rose 0.8 percent.

Economists remain confident that the European Central Bank will raise the deposit rate by another quarter of a percentage point when policymakers meet on Thursday.

In the UK, strong wage data pushed short-term gold bond yields above the level reached during the turmoil following former Prime Minister Liz Truss’ “mini” budget last fall, raising the possibility that the Bank of England will raise interest rates further.

“With all indications that inflationary pressures have failed to abate and a rebuild may be taking place contrary to the Bank of England’s expectations, [labour market] “The data will send shock waves through Threadneedle Street,” said Nick Rees, forex analyst at Monex Europe.

The yield on two-year Treasury notes rose 0.26 percentage point to 4.89 percent, compared with a peak of 4.64 percent in late September.