However limiting the optimism, the data suggested that underlying inflation rose by 3.1% in the previous month as markets look for signs that tariffs and trade uncertainty were filtering into prices.
Yields on shorter-dated Treasury bonds – a reflection of interest rate expectations – moved lower after the data and interest rate futures showed traders are giving an 88.8% chance that the Fed could lower interest rates by about 25 basis points in September.
“My bigger fear is that this is still early innings of this process and just as the Fed will be beginning to cut rates in the autumn, that’s when the inflation data will probably start to be registering some of these more direct tariff price increases and it’s going to complicate the rate-cutting decision,” John Velis, a macro strategist at BNY said.
The data also comes at a time when there are growing concerns over the quality of economic data, weeks after Trump fired the head of the Bureau of Labor Statistics following downward revisions to previous months’ nonfarm payrolls counts.
At 09:49 a.m. ET, the Dow Jones Industrial Average rose 163.16 points, or 0.37%, to 44,139.85, the S&P 500 gained 20.65 points, or 0.32%, to 6,394.10 and the Nasdaq Composite gained 69.38 points, or 0.32%, to 21,454.78.
Eight of the 11 S&P 500 sectors were in gains, with energy in the lead with a 0.8% rise.
Further providing some relief, U.S. and China extended their tariff truce until November 10, staving off triple-digit duties on each other’s goods.
U.S. stocks have rallied in recent weeks and the tech-heavy Nasdaq touched a record high on Tuesday, boosted by better-than-expected earnings from technology majors, a detente between the U.S. and its top trade partners and on expectations of rate cuts.
Reflecting the confidence, data from BofA Global Research showed that inflows into U.S. stocks last week were the largest in two years.
Markets are monitoring developments around Trump’s nominee E.J. Antoni to the Bureau of Labor Statistics commissioner post and potential candidates for the Fed’s top job.
Among single stocks, Intel rose 1.7% as Trump praised CEO Lip-Bu Tan following their meeting on Monday, days after seeking Tan’s resignation.
Palo Alto Networks gained 2% after brokerage Piper Sandler raised its rating on the cybersecurity stock to “overweight” from “neutral”.
U.S.-listed shares of On Holding climbed 11.6% after the sportswear maker raised its annual sales forecast.
Cardinal Health dropped 9% after the drug distributor said it will buy healthcare management firm Solaris for $1.9 billion.
Advancing issues outnumbered decliners by a 2.44-to-1 ratio on the NYSE and by a 1.78-to-1 ratio on the Nasdaq.
The S&P 500 posted 14 new 52-week highs and eight new lows, while the Nasdaq Composite recorded 43 new highs and 44 new lows.
