U.S. stocks rose Tuesday, a day after the major averages snapped a three-session decline, as traders awaited key inflation data slated for release later in the week.
The Dow Jones Industrial Average advanced 317.02 points, or 0.93%, to close at 34,261.42. The S&P 500 rose 0.67% to end at 4,439.26. The tech-focused Nasdaq Composite gained 0.55% to 13,760.70.
Salesforce’s stock rose nearly 4% after the company announced it would increase prices across the board in August. Activision Blizzard’s shares jumped 10% after a federal judge denied the Federal Trade Commission’s request for a preliminary injunction to stop Microsoft’s acquisition of the video game company. The decision meant that the two companies were closer to completing their deal.
The June consumer price index report set for release Wednesday, as well as the June producer price index due out Thursday, will shed light on whether the decline in inflation has continued, and create the backdrop for future direction of interest rates. Economists polled by Dow Jones expect the index rose 3.1% last month on a year-over-year basis.
Investors have penciled in another quarter-point increase at the Federal Reserve’s July 25-26 meeting. But they are undecided about what the central bank will do at its September meeting after last week’s continued robust jobs data raised concern that policymakers will revert to raising rates following the June pause.
“I think [on Wednesday] you’re going to see further evidence that the CPI-measured inflation is continuing its descent. And a lot of that was because of the impacts of Covid. But that’s not good enough for the Fed. The Fed worries about there being [a] wage price spiral,” said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.
“I think there’s going to be a recession, because the Fed [will] keep going until they see the labor market crack and until wage [growth] goes well below 4%,” Schutte continued.
Second-quarter earnings season kicks off later this week with results from “systemically important financial institutions” such as JPMorgan Chase, Wells Fargo and Citigroup, plus BlackRock, PepsiCo and Delta Air. Dow component UnitedHealth reports Friday.
