Lower inflationary pressure is lifting Wall Street up
Latest data on producer prices boosts stocks on Wall Street. Tech stocks are particularly strong, with investors snapping up shares in Nvidia, among others. Starbucks' shares are also in high demand.
Signs of easing inflation pressure in the US sparked buying activity on Wall Street. The Nasdaq tech index closed up 2.4% at 17,187 points on Tuesday. The Dow Jones Industrial Average rose 1.0% to 39,765 points. The broader S&P 500 gained 1.7% to 5,434 points. Tech and communication services stocks were particularly popular. Nvidia rose 6.5%, while Intel was the Dow's top gainer with a 5.7% increase.
"This feels like a 'return to normalcy' for markets," said Chris Beauchamp, chief market analyst at IG, referring to the tech stocks' performance. US producer prices rose slightly in July, beating expectations. The producer price index rose 2.2% in the 12 months to July, after jumping 2.7% in June. "This gives the Fed more room to cut rates later this year, which is what's driving market reaction now," explained Dave Grecsek, investment strategist at Aspiriant. Investors are now eagerly awaiting July's consumer price index data, due out on Wednesday.
Starbucks stock soars after CEO change
Among individual stocks, Starbucks shares surged as much as 20% after the world's largest coffee chain named Brian Niccol, CEO of Chipotle Mexican Grill, as its new CEO. Activist investor Elliott had previously pressured the company to improve its stock price. Starbucks' stock has lost around 20% of its value over the past five years, while the S&P 500 has risen over 80%. Meanwhile, Chipotle shares fell nearly 10%.
BuzzFeed also sparked a stock rally. The New York-based owner of one of the most popular news websites in the English-speaking world saw its shares jump over 25% on the back of a reduced net loss in the second quarter.
Home Depot shares also rose, up 1.2%, despite the home improvement retailer posting higher-than-expected earnings but lowering its outlook.
Meanwhile, oil prices reversed their recent gains, ending a five-day rally due to dimmed prospects in China. Oil cartel OPEC lowered its forecast for this year's demand growth, pulling energy stocks into negative territory.
Catch up on all the latest market developments here.
The Dow Jones Industrial Average, along with the Nasdaq and S&P 500, all experienced gains due to signs of easing inflation pressure in the US. The Dow Jones Industrial Average specifically rose 1.0% to 39,765 points.
Investors are also closely watching the upcoming consumer price index data, which could potentially influence further market reactions.
