Wall Street rallies to one of its best days of the year after inflation report

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Wall Street rallies to one of its best days of the year after inflation report

NEW YORK (AP) — U.S. stocks rallied Tuesday to one of their best days of the year after the first of several highly anticipated reports on the economy this week came in

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The S&P 500 jumped 1.7% for its third-best day of 2024 after the U.S. government reported inflation at the wholesale level slowed last month by more than economists expected. The Dow Jones Industrial Average rose 408 points, or 1%, and the Nasdaq composite clambered 2.3% higher.

High inflation has been the

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and financial markets for years. It finally looks to be slowing enough to get the Federal Reserve to

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, which the Fed has been keeping at

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in order to stifle inflation.

Treasury yields eased in the bond market following the inflation data, as traders remain convinced the Fed’s meeting next month will bring the first

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since the COVID ****** of 2020. The yield on the 10-year Treasury fell to 3.84% from 3.91% late Monday.

All is not clear, though. On Wednesday, the U.S. government will deliver the latest monthly update on inflation that U.S. consumers are feeling, which could be less encouraging. And on Thursday will come a report showing how much U.S. shoppers are

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A growing worry on Wall Street is that the Fed may have kept interest rates too high for too long and undercut the U.S. economy by making it so expensive to borrow money. The economy is still growing, and many economists don’t expect a recession, but a

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last month raised questions about its strength.

Such questions weigh because even cuts to interest rates haven’t been enough for stocks to rise significantly in the ensuing 18 months if a recession hits, according to Chris Haverland, global equity strategist at Wells Fargo Investment Institute.

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on Tuesday delivered stronger profit for the spring quarter than analysts expected, but it also said high interest rates and uncertainty about the economy are keeping some customers from spending on home improvement projects.

The retail giant lowered its full-year forecasts for an important measure of sales and for profit, even though it topped expectations for the second quarter. Its stock rose 1.2% after flipping earlier between modest gains and losses.

Elsewhere on Wall Street, Starbucks soared 24.5% after

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to leave his job as CEO of Chipotle ******** Grill to take over the coffee chain. He will start as chairman and chief executive next month and will replace Laxman Narasimhan, who is stepping down immediately.

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Chipotle, meanwhile, dropped 7.5%. Niccol has been its chief executive since 2018 and its chairman since 2020, and he helped

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more than 240% for the five years through Monday. That tower’s over the S&P 500’s 96% return including dividends. Chipotle said its chief operating officer, Scott Boatwright, would be its interim CEO.

In stock markets abroad, indexes were modestly higher across much of Europe and Asia. Japan’s Nikkei 225 was an outlier and jumped 3.4%.

Japan’s market has been viciously volatile recently, including the worst drop for the Nikkei 225 since the

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. It’s been swinging since a hike to interest rates by

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forced many hedge funds and other investors to abandon

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all at once, where they had borrowed ********* yen at cheap rates to invest elsewhere. The forced selling that followed the surge in the ********* yen’s value

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But a promise last week by a top Bank of Japan official not to raise rates further as long as markets are “unstable” has helped calm the market.

Another worry that’s made Wall Street so shaky the last month is concerns that investors went overboard in their

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and took the prices of Big Tech and AI-related stocks too high.

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, the company whose chips are powering much of the move into AI, has been at the center of the action. After soaring more than 170% through the year’s first six and a half months, it plunged more than 20% over the ensuing three weeks.

On Tuesday, Nvidia rose 6.5% and was the strongest force pushing upward on the S&P 500. All the other stocks in the small group known as

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also climbed. They almost singlehandedly pushed the S&P 500 to dozens of all-time highs earlier this year, even as high interest rates weighed on much of the rest of the stock market.

Unlike much of the early part of this year, it wasn’t just the Magnificent Seven rising Tuesday. Wall Street’s rally was more widespread, and nearly 85% of the stocks in the S&P 500 rose. The smaller stocks in the Russell 2000 index also climbed 1.6%.

All told, the S&P 500 rose 90.04 points to 5,434.43. The Dow added 408.63 to 39,765.64, and the Nasdaq composite gained 407.00 to 17,187.61.

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AP Business Writer Yuri Kageyama contributed.

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