Stock market today: Stocks pop after CPI, with Fed looming
What specific data from the Consumer Price Index (CPI) report influenced the stock market's reaction?
The Consumer Price Index (CPI) report showed that inflation pressures eased more than expected in May. The CPI was flat over the previous month and rose 3.3% over the prior year, which was lower than the 3.4% year-over-year change economists had expected. On a core basis, which strips out the more volatile costs of food and gas, prices in May climbed 0.2% over the prior month and 3.4% over last year, which was cooler than April's data. This lower-than-expected inflation data led to a positive reaction in the stock market, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all rising.
What were the market expectations for the Federal Reserve's interest rate cuts following the release of the inflation data?
Following the release of the inflation data, markets were pricing in a roughly 69% chance the Federal Reserve begins to cut rates by its September meeting, according to data from the CME FedWatch Tool2. This was up from about a 53% chance the day prior.
How did the US stock market perform on the day the latest inflation data was released?
On the day the latest inflation data was released, the US stock market performed positively. The Consumer Price Index (CPI) showed that consumer prices increased less than expected in May. As a result, the S&P 500 built on a 27th record close of the year, rising more than 0.8%. The tech-heavy Nasdaq Composite rose nearly 0.9%, also adding to a record close from the prior day. The Dow Jones Industrial Average also popped about 0.9%. This better-than-expected inflation data shifted market expectations for Federal Reserve rate cuts this year, with markets pricing in a roughly 69% chance the Federal Reserve begins to cut rates by its September meeting.