Key points:

  • US indices (S&P 500, Nasdaq, Dow Jones) showed significant growth, reaching almost two-week highs.
  • The main reason for the growth was the publication of softer inflation data.
  • Starbucks shares rose sharply after the appointment of a new CEO.

US stock indexes showed significant growth on Tuesday, reaching almost two-week highs. The reason for this was encouraging data on inflation at the manufacturer level, which increased expectations of a key interest rate cut by the Federal Reserve in September of this year.

The S&P 500 index added 90.04 points (1.68%), closing at 5,434.43 points. The Nasdaq Composite also showed positive dynamics, increasing by 407.0 points (2.43%) and ending trading at 17,187.61 points. The Dow Jones Industrial Average index rose by 408.63 points (1.04%), closing at 39,765.64 points.

Inflation data softer this month

The July data on the US producer price index came in below consensus forecasts. The restraining factor for price growth was services, the cost of which fell. This indicates that the moderate pace of inflation in the country remains. Annual inflation at the producer level slowed to 2.2% in July compared to 2.7% in June.

Investors are eagerly awaiting the publication of consumer price data on Wednesday and retail sales on Thursday. These indicators will allow them to more accurately assess the current inflation situation in the US and form more reasonable expectations for the future monetary policy of the Federal Reserve.

Michael James, managing director of equity trading at Wedbush Securities, noted that the latest data confirms the effectiveness of the measures taken by the Fed to contain inflation. In his opinion, the likelihood of an interest rate cut in the near future has increased significantly.

“Tomorrow we will receive data on the consumer price index, which will have a significant impact on the market given the high degree of uncertainty among investors,” James said.

Starbucks shares soar

The chances of the Federal Reserve cutting interest rates by 50 basis points in the near future have increased to 55%, according to CME’s FedWatch tool. This dynamic was the result of the latest economic reports.

The US stock market showed mixed dynamics on Monday. The S&P 500 index was almost unchanged, while the Nasdaq Composite showed moderate growth. Such investor restraint is associated with mixed macroeconomic data and the interest rate hike by the Bank of Japan.

The growth leaders were technology and durable goods stocks. At the same time, the energy sector came under pressure due to the decline in oil prices. OPEC’s decision to adjust its oil demand forecast downwards eased fears of energy shortages amid geopolitical tensions in the Middle East.

Particularly noteworthy is the dynamics of Starbucks shares, which rose by 24.5%, which was an all-time high for the company. Such a significant increase was due to the appointment of a new CEO, Brian Niccol, who previously headed Chipotle Mexican Grill.