Stocks in the United States strengthened today, with the S&P 500 and Nasdaq indexes rising to their highest in 14 months. The May inflation report supported expectations that the US Federal Reserve’s (Fed) Monetary Policy Committee will not raise interest rates at the end of its two-day meeting.
Slowest growth
A report from the U.S. Labor Department showed that U.S. consumer prices increased 0.1 percent in May compared with the previous month. The pace of growth slowed from 0.4 percent in April. Year-on-year, prices rose by four per cent, the slowest growth since March 2021. This was due to lower prices for energy products and services.
“If the Fed was looking for data to point to and say, ‘We’re going to take a pause in June,’ I think they got it today,” said SoFi analyst Liz Young.
Traders now give a 93 percent chance that the Fed will decide to forgo an eleventh interest rate hike at the end of its two-day meeting. As a result, the key interest rate is expected to remain at five to 5.25 percent on Wednesday. The odds of the Fed raising interest rates by a quarter percentage point in July are 62 percent, according to the Fed.
The S&P 500 is rising
All major sectors of the S&P 500 index strengthened, led by commodity producers and energy firms. Shares of U.S.-listed Chinese companies such as Alibaba Group and JD.com also rose as China’s central bank cut its short-term borrowing rate for the first time in 10 months. Shares in Bunge rose 2.5 percent after announcing its merger with Viterra, Reuters reported.
The U.S. dollar weakened against a basket of currencies today as a May inflation report suggested the Fed will announce a pause in interest rate hikes on Wednesday. The dollar index, which tracks the dollar’s performance against a basket of six leading world currencies, fell 0.3 percent to 103.31 points.
The euro strengthened 0.3 percent against the dollar to $1.0796. The dollar rose half a percent against the yen to JPY140.21. The euro rose 0.8 percent against the yen to JPY151.31.
source: ČTK
