Wall Street's main indexes all advanced and the Nasdaq scored a record closing high as Federal Reserve Chair Jerome Powell reassured investors while they digested Tuesday's data and waited for Wednesday's crucial consumer inflation report. U.S. producer prices increased more than expected in April as the cost of services and goods rose sharply, leading traders to pare back bets of a first rate cut in September.
"The market is getting more comfortable with higher-for-longer rates. The real question has been lately if a hike is a possibility and Powell's reiterating that it's not on the table right now," said Lindsey Bell, chief strategist, 248 ventures, Charlotte, North Carolina. Bell also noted that stocks appeared to gain ground during the session as Treasury yields declined.
Sticky inflation and persistent labor market strength have prompted financial markets and most economists to push back expectations for an initial Fed interest rate cut to September, from March seen at the start of the year. Also supporting the indexes on Tuesday was an advance in shares market heavyweight Alphabet after the Google parent showed how it is using artificial intelligence across its businesses, including a beefed-up Gemini chatbot and improvements to its prized search engine.
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