On Tuesday, stocks in the U.S. posted strong gains after lower than expected inflation data increased the possibility of a hefty interest rate cut by the Federal Reserve in Sept.
The NASDAQ Composite climbed 200 points, or 1.2%, the S&P 500 gained 43 points, or 0.8%, and the dow jones Industrial Average rose 95 points, or 0.2%.
This week’s focus is solidly on the newest U.S. inflation readings for more clues about the U.S. economy.
Data released on Tuesday showed the PPI in July rose 0.1% on a monthly basis, versus the 0.2% gain expected by economists. It rose to 2.2% annually, versus estimates of a 2.3% rise.
Excluding volatile energy and food components, core PPI was flat for the month, versus an expected rise of 0.2%. The narrower PPI measure stood at 2.4% annually, versus the estimate of a 2.7% rise.
Investors will evaluate the data, including the CPI release on Wednesday, in an attempt to decide what the Federal Reserve is likely to do at its meeting in Sept.
Traders are split between a 0.25% and 0.5% cut, but this indication of easing inflation will likely give more weight to the chances of a bigger cut.
At the end of July, the Fed kept the policy rate unchanged.
