US stocks advance following CPI data

Despite higher-than-expected February inflation data, US stocks continued to rise, with the S&P 500 rising nearly 1%, the Nasdaq Composite climbing 1.4%, and the Dow Jones Industrial Average increasing 0.6%. Treasury yields also rose, with the 10-year yield rising 4 basis points to trade around 4.15%. Gold prices fell 1% to trade near $2,166.

US stocks rose on Tuesday after key inflation data came in hotter than expected, helping set expectations for the timing of a Federal Reserve interest-rate cut. The S&P 500 rose nearly 1%, while the tech-heavy Nasdaq Composite climbed roughly 1.4% after two days of losses. The Dow Jones Industrial Average ticked up about 0.6%. Treasury yields also gained with the 10-year yield rising 4 basis points to trade around 4.15%. Gold prices fell 1% to trade near $2,166.

Investors are digesting the Consumer Price Index release, one of the most important data inputs for the Fed in deciding its next policy move. Headline inflation met expectations with a monthly gain of 0.4% in February, following a 0.3% rise the month before. However, “core” CPI, which strips out food and energy prices, came in at a 0.4% rise on the month and 3.1% gain on the year, both higher than estimates.

The CPI print is seen as influential, given Fed policymakers have said they want to be sure inflation is easing before beginning to bring rates down from their historically high level. Before the CPI release, S&P 500 traders were hedging moves of 0.9% in either direction for stocks.

On the corporate front, Oracle shares jumped more than 10% on signs the database giant is making progress in cloud computing amid a tie-up with AI chip giant Nvidia (NVDA). Shares of Southwest took a nosedive on Tuesday, falling about 14%, after the company said its reevaluating prior full-year guidance amid an expected decline of 737 Max aircraft deliveries this year. 3M shares rose 3% after the conglomerate announced William Brown as its next CEO. On Holding shares sank roughly 14% on Tuesday after it missed fourth-quarter earnings estimates on both the top and bottom lines.