US stocks end higher as inflation data cements bets on rate hike pause

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The S&P 500 and Nasdaq reached their highest closes in 14 months on Tuesday after data showed consumer prices rose modestly in May, boosting bets that the Federal Reserve will not raise interest rates on Wednesday.

Stocks advanced after a U.S. Labor Department report showed the rose 0.1% last month following a 0.4% jump in April, with core inflation unchanged at 0.4%.

On a year-on-year basis, headline inflation increased by a less-than-estimated 4.0%, reflecting declines in the cost of energy products and services, including gasoline and electricity. "If the Fed was looking for data to point to say, 'We're going to pause in June,' I think they got it today," said Liz Young, head of investment strategy at SoFi in New York.

"But it's another one of those that you can cut whichever way you want to make your case. If you want to be bullish, you say inflation is down more than 50% since its peak. If you want to be bearish, you can say inflation is still more than twice the Fed's target," Young said.Traders have priced in a 93% chance that the U.S. central bank will hold interest rates at the 5%-5.

 

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