Stocks rose on Tuesday, boosted by encouraging inflation data and a renewed sense of optimism among investors. The Dow Jones Industrial Average rose more than 350 points, bringing the broader market closer to its all-time high.
The producer price index (PPI), a measure of wholesale inflation, came in lower than expected, boosting investor confidence and fueling expectations of a less hawkish monetary policy stance from the Federal Reserve. The positive PPI reading set the stage for Wednesday's release of the consumer price index (CPI), a closely watched gauge of headline inflation.
The S&P 500 led the rally, gaining more than 1.5%, while the Nasdaq Composite jumped 2.2%. This marked a significant rebound from the previous week’s market volatility, as measured by the Cboe Volatility Index (VIX), which has since fallen below 20.
The technology sector was a standout performer, with Nvidia shares up more than 4%. Starbucks also surged, with its stock price rising more than 21% following the announcement of Brian Niccol as its new CEO.
Tuesday’s rally reflects growing belief among investors that inflationary pressures could ease, potentially paving the way for a more benign economic environment. However, market participants remain cautious, with the upcoming CPI report expected to provide further clarity on the inflation outlook and the Federal Reserve’s next moves.