A wave of bullish sentiment swept through Wall Street on Tuesday after lower-than-expected producer inflation data solidified expectations for Federal Reserve rate cuts, prompting speculators to increase bets on a more significant 50-basis-point move.
The Producer Price Index (PPI) edged higher by only 0.1% from the previous month, falling short of the anticipated 0.2% increase, and marked a 2.2% rise year-over-year, down from the previous 2.7% print.
Traders adjusted their bets on a September rate cut, now assigning a higher probability to a larger 50-basis-point cut at 55% compared to a 45% chance for a smaller 25-basis-point reduction.
The S&P 500 rose 1.1%, the Nasdaq climbed 1.8% and the Dow Jones gained 250 points or 0.6% by midday trading in New York.
Treasury yields fell across all maturities, with the rate-sensitive two-year yield declining by 6 basis points. The U.S. dollar index lost ground against other major currencies and fell 0.3% against the Japanese yen.
Commodities took a breather after Monday's strong gains, driven by escalating geopolitical risks in the Middle East. Oil prices retreated by 1.8%, pulling energy stocks lower, while gold remained steady, hovering just under 1% below its record highs.
Bitcoin (CRYPTO: BTC) rose 0.6%, eyeing the second-straight session of gains.
Tuesday's Performance In Major US Indices, ETFs
| Major Indices | Price | 1-day %chg |
| Nasdaq 100 | 18,873.07 | 1.8% |
| S&P 500 | 5,409.01 | 1.2% |
| Russell 2000 | 2,082.91 | 1.1% |
| Dow Jones | 39,608.08 | 0.6% |
According to Benzinga Pro data:
- The SPDR S&P 500 ETF Trust (NYSE:SPY) rose 1.1% to $539.43.
- The SPDR Dow Jones Industrial Average (NYSE:DIA) was trading 0.7% higher to $396.47.
- The tech-heavy Invesco QQQ Trust Series (NASDAQ:QQQ) rallied 1.9% to $460.05.
- The iShares Russell 2000 ETF (NYSE:IWM) tumbled 1.1% to $206.85.
- The Technology Select Sector SPDR Fund (NYSE:XLK) outperformed, up by 2.5%. The Energy Select Sector SPDR Fund (NYSE:XLE) lagged, down by 0.9%.
Monday's Stock Movers
- Starbucks Corp. (NYSE:SBUX) skyrocketed over 20% following the announcement that Brian Niccol will take the helm as the company's new CEO, departing from Chipotle Mexican Grill Inc. (NYSE:CMG). The reaction marked the strongest one-day surge since the coffee-chain giant went public in 1993.
- Shares of CMG plummeted over 9%. The company appointed former chief operating officer Scott Boatwright as interim CEO.
- Home Depot, Inc. (NYSE:HD) rose over 2% after reporting stronger-than-expected revenue and profits last quarter.
- Other stocks reacting to company earnings reports included On Holding AG (NYSE:ONON), up 7.4%, Loar Holdings Inc. (NYSE:LOAR), up 15.4%, Pacs Group Inc. (NYSE:PACS), up nearly 16%, Dyne Therapeutics Inc. (NASDAQ:DYN), down 0.2% and Talen Energy Corp. (NASDAQ:TLN) up 6.7%.
- Companies slated to report after the close include Nu Holdings Ltd. (NYSE:NU) and XP Inc. (NASDAQ:XP)
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