Investors cheered a milder inflation report, sending the main indexes higher at midday. Nvidia climbed 3% and reached a $1 trillion market cap while Tesla extended a historic run.
Indexes faded after an opening jump, but clawed their way back. The Nasdaq composite and S&P 500 were up 0.7%. The Dow Jones Industrial Average rose 0.5% and is trying to top resistance around the 34,000 level.
Small caps outperformed, as the Russell 2000 rallied 1.1%. Volume rose on the NYSE and Nasdaq compared with the same time on Monday.
The Innovator IBD 50 ETF outperformed with a 1.1% increase. IBD 50 stock Cloudflare regained the 66.20 buy point of a double-bottom base in heavy trading.
IBD Big Cap 20 stock Parker Hannifin topped the 364.57 buy point of a cup-without-handle base. But volume was light.
Stock Market Likes Inflation Data
The consumer price index for May climbed 0.1% from the previous month and 4% on an annual basis. That was essentially in line with Econoday's consensus forecasts. In April, the CPI rose 0.4% and 4.9% on a yearly basis. May core prices, which exclude food and energy items, climbed 0.4% and 5.3%, respectively, also in line with views.
The CPI data should motivate the Federal Reserve to leave interest rates unchanged at this week's policy meeting. But it may not be the end of the current tightening cycle. Odds for a rate hike in July, however, fell sharply after the inflation report.
U.S. stocks have rebounded largely on expectations of cooling inflation and a winding down of rate hikes. But with rate hikes expected to end, the stock market could soon lack one of its driving forces.
Alexandra Wilson-Elizondo, Deputy CIO of Multi-Asset Solutions at Goldman Sachs Asset Management, says the May CPI confirms the disinflationary trend, and reaffirms expectations for a Fed pause Wednesday. But she adds that the rate of disinflation remains "incompatible with the Fed's 2% target." The Fed's closely watched "supercore" figure, which shows the cost of workers to deliver services, accelerated in May.
Fitch Ratings Chief Economist Brian Coulton cautioned that nearly all of the month's decline in headline inflation was thanks to lower gasoline prices. "These numbers show underlying inflationary pressures are still stubbornly high, with core inflation (CPI excluding food and energy) stuck at 0.4% per month," Coulton said in a note to clients.
The 10-year Treasury yield was nearly unchanged at 3.75% Tuesday morning.
Nvidia Hits $1 Tril Market Cap
Oracle gapped up to another record high but pared gains. The database company's May-quarter earnings and revenue topped estimates, and cloud computing growth also was above expectations.
The company's results were another boost for the Technology Select Sector SPDR ETF, which leapt nearly 9% last month and is up more than 3% so far this month. Today, it is up 0.5%.
With Nvidia up 3% to 406.68 at midday, its market capitalization topped the $1 trillion mark, according to Dow Jones Market Data. NVDA shares need to hold above 404.85 to stay in the $1 trillion club.
Apple fell 0.3% to 183.24, but the stock is still near record highs and will reach a $3 trillion market capitalization with a move above 190.73.
China-based video gaming company NetEase broke out of a flat base in heavy trading. It is in buy range from its 94.99 buy point to 99.74.
In the leisure sector, Manchester United jumped 10% in heavy volume, gapping above its 50-day moving average. A newspaper in Qatar reported that Qatar's Sheikh Jassim bin Hamad al-Thani will be picked as the preferred bidder for the English Premier League club. The U.S.-based Glazer family has controlling ownership of the club.
Tesla rose more than 2% and is on track to extend its win streak to 13 days, a record. Shares have rallied nearly 40% in that impressive run. Investors who bought at the 207.79 breakout can consider taking some profits, with gains from that level now exceeding 20%.
The EV stock rose despite that Cathie Wood's Ark Investment Management funds shed more than 393,000 shares of Tesla on Monday for around $98.2 million.
Home Depot erased gains despite that it affirmed its full-year guidance. The home-improvement chain reiterated its fiscal-year sales and same-store sales forecasts, with both seen falling 2% to 5% from the year before. It forecast an EPS decline of 7% to 13% from the last fiscal year.
The stock, one of the 30 Dow components, was flat at midday but is regaining its 200-day moving average.
