US equities celebrate inflation data as bets on Fed’s pause increase

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.

Nvidia (NVDA.O) jumped 3.9%, becoming the first chipmaker to end a trading session with a market capitalization above $1 trillion after smaller rival Advanced Micro Devices gave an update on its artificial intelligence strategy that failed to impress investors. AMD dropped 3.6%.

Traders have priced in a 93% chance that the U.S. central bank will hold interest rates at the 5%-5.25% range on Wednesday, and 62% odds of 25-basis-point hike in July, according to the CME Fedwatch tool.


The benchmark S&P 500 (.SPX) has recovered about 22% from its October 2022 closing low, fueled in large part by gains in market heavyweights such as Apple Inc, Nvidia Corp and Tesla Inc. More recently, sectors such as energy and materials have climbed, as well as small-cap stocks.