NEW YORK: US stocks ended sharply higher on Tuesday (March 12), with the S&P 500 registering a record high close as Oracle shares surged and consumer price data failed to dampen investors’ hopes of interest rate cuts in the coming months.
The Dow Jones Industrial Average rose 235.74 points, or 0.61%, to 39,005.4. The S&P 500 gained 57.3 points, or 1.12%, at 5,175.24 and the Nasdaq Composite added 246.36 points, or 1.54%, at 16,265.64.
Shares of Oracle jumped 11.7% and reached a record high, a day after it reported upbeat quarterly results and said it is set to make a joint announcement with artificial intelligence chip giant Nvidia.
Nvidia shares gained 7.2% and an index of semiconductors rose 2.1% and snapped a two-day losing streak.
The Labor Department reported that the Consumer Price Index (CPI) rose 0.4% last month after climbing 0.3% in January. Excluding volatile food and energy components, consumer prices increased 0.4% in February after rising by the same margin in January.
“Investors have gotten comfortable with the notion that it’s not about when the Fed will lower rates but rather by how much, and a delay – whether it happens in May like many were initially hoping or in September – ultimately doesn’t matter,” said Oliver Pursche, senior vice-president and adviser for Wealthspire Advisors in Westport, Connecticut.
“It’s that they will and that a less restrictive environment is coming.”
Traders now see a 70% chance of the first rate cut coming in June, the CME FedWatch Tool showed, versus 71% ahead of the inflation report.
“If you look at economic data, it continues to be pretty strong,” Pursche added. “And from my perspective as a consumer, employee and investor, I’d rather have a strong economy and slightly elevated interest rates than a weak economy that requires stimulus.”
Producer price data is due later this week.
On the downside, shares of Boeing fell 4.3%. Boeing told employees in a memo on Tuesday it is adding weekly compliance checks for every 737 factory work area and additional audits of equipment to reduce quality problems.
The US Federal Aviation Administration has curbed Boeing production following the mid-air panel blowout on a new Alaska Airlines 737 MAX 9 jet on Jan 5.
Also, US carriers warned that their plans to increase capacity were in doubt due to jet delivery delays from Boeing.
Shares of Southwest Airlines were down 14.9%. – Reuters
