US stocks rose on Wednesday, eyeing fresh record highs as a soft reading on consumer prices fueled hopes that the Federal Reserve could cut interest rates sooner than expected.
The S&P 500 (^GSPC) rose 0.9% while the Dow Jones Industrial Average (^DJI) jumped about 0.6%. The tech-heavy Nasdaq Composite (^IXIC) climbed about 1% after hitting a record close on Tuesday.
All three major averages were set to close near or at all-time highs.
The Consumer Price Index rose 0.3% over the previous month and 3.4% over the prior year in April, a deceleration from March. "Core" inflation — which strips out the cost of food and gas — also cooled.
The relatively cool inflation reading sparked new bets on Fed rate cuts as soon as September. According to the CME FedWatch Tool, around 70% of traders now expect at least one cut by the September meeting, a notable increase from a week ago.
Stocks have ground higher amid rekindled confidence that the US economy is in good enough shape for the Federal Reserve to start bringing down rates from their current historic highs. That optimism has fueled a resurgence in bullishness in the market.
Elsewhere on the macroeconomic front, retail sales fell flat — exactly — last month, coming in well short of Wall Street’s expectations.
Meanwhile, the pace slackened in the frenzied meme stock rally that saw GameStop (GME) and AMC (AMC) prices more than double at one point on Tuesday. Both stocks dropped more than 20% in midday trading on Wednesday.
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