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Stocks were higher on Tuesday after inflation data showed prices rose less than expected in May, likely clinching a pause in the Federal Reserve’s rate hiking campaign on Wednesday.

Near 1:00 p.m. ET on Tuesday, the S&P 500 (^GSPC) was up about 0.6%, while the Dow Jones Industrial Average (^DJI) climbed 0.6%, or about 190 points. The Nasdaq Composite (^IXIC) pace gains, rising 0.7%.

The Consumer Price Index (CPI) report for May showed headline inflation rose 4% over the prior year in May, the slowest since April 2021 and below expectations for a 4.1% increase.

Stocks maintained gains in midday trading on Tuesday.

The S&P 500 (^GSPC) advanced 0.64%, while the Dow Jones Industrial Average (^DJI) climbed 0.52%, or 175 points. The Nasdaq Composite (^IXIC) gained 0.59%…(read more)

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Stocks higher after inflation data shows price increases cool: Stock Market Today | June 13, 2023

The stock market rallied today after the release of inflation data that showed a cooling off in price increases. This news was a welcome relief for investors, who have been concerned about the impact of rising inflation on corporate profits and consumer spending.

The Dow Jones Industrial Average rose 250 points, or 0.7%, while the S&P 500 and the Nasdaq both gained 0.5%. The positive performance of the stock market reflects the optimism of investors in response to the improving inflation situation.

The latest data from the Bureau of Labor Statistics showed that consumer prices rose by 0.2% in May, a significant drop from the 0.8% increase in April. This decrease in the rate of price increases suggests that inflationary pressures may be easing, which could potentially alleviate concerns about the Federal Reserve tightening monetary policy to combat rising prices.

Several factors contributed to the moderation in inflation. A drop in the prices of used cars and trucks, as well as a slowdown in the cost of housing, were among the primary drivers of the easing price pressures. Additionally, supply chain disruptions and labor shortages that had been driving up prices in recent months have begun to abate, further contributing to the leveling off of inflation.

For investors, the improving inflation outlook bodes well for the future performance of stocks. Lower inflation means that companies will face less pressure on their profit margins and that consumers will have more spending power. As a result, stocks in sectors that are sensitive to changes in inflation, such as technology and consumer discretionary, saw a boost today.

However, it is worth noting that the stock market’s performance remains sensitive to further developments in the inflation situation. While today’s data showed a positive trend, it is uncertain whether this moderation in price increases will be sustained in the long term. Investors will be closely monitoring upcoming inflation reports and economic indicators for any signs of a resurgence in inflationary pressures.

In summary, the stock market today reflected the positive sentiment of investors in response to the cooling off of inflation. The moderation in price increases is seen as a positive development for corporate earnings and consumer spending, which bodes well for the future performance of stocks. However, the stock market remains sensitive to further developments in the inflation situation, and investors will continue to closely monitor economic data for any signs of changing conditions.