Wall Street ticks higher after May inflation data

Wall Street’s main indexes have nudged higher as a cooler-than-expected inflation report calmed concerns around tariff-driven price pressures and fanned expectations for interest rate cuts.

Data showed consumer prices increased only marginally in May but inflation is expected to accelerate in the coming months due to the import tariffs of US President Donald Trump’s administration.

Annually, headline inflation stood at 2.4 per cent, lower than the 2.5 per cent rise estimated by economists polled by Reuters.

“Longer term there’s still concerns about Trump’s tariffs being inflationary but this report was better than expected and it fuels hope that the Federal Reserve will be able to step in with rate cuts later on this year,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.

Traders are pricing in 48 basis points of rate cuts by year-end, per data compiled by LSEG.

They are pencilling in a 57 per cent chance of a 25 bps cut in September, according to the CME Group’s FedWatch tool.

The S&P 500 and Nasdaq also traded near record levels, with the S&P 500 about 1.6 per cent below all-time highs touched in February and the Nasdaq about 2.0 per cent below its record peaks reached in December.

A day after officials from the US and China agreed on a framework to put their tariff truce back on track, Trump said the US deal with China was done, with China to supply magnets and rare earth minerals.

Investors are awaiting more details from the two-day meeting and hoping for a lasting resolution to the trade tensions that have disrupted global markets for much of the year.

The US stock market has rallied in recent weeks, recovering from a slump in April sparked by Trump’s “Liberation Day” tariffs.

In early trading on Wednesday, the Dow Jones Industrial Average rose 55.84 points, or 0.13 per cent, to 42,922.71, the S&P 500 gained 6.13 points, or 0.10 per cent, to 6,044.94 and the Nasdaq Composite gained 26.66 points, or 0.14 per cent, to 19,742.60.

Six of the 11 major S&P 500 sub-sectors rose, led by healthcare stocks with an about 0.4 per cent rise.

On the flip side, materials fell 0.7 per cent.

Among stocks, Tesla advanced 1.7 per cent after CEO Elon Musk said he regrets some of the posts he made last week about Trump, following an abrupt rift that has roiled the electric-vehicle maker’s shares.

Software development platform provider GitLab dropped 10.2 per cent after reporting quarterly results.

Shares of videogame retailer GameStop fell 4.4 per cent after it reported a decline in first-quarter revenue.

Summit Therapeutics was down 1.9 per cent after brokerage Leerink Partners started coverage on the drug developer with an “underperform” rating.

Advancing issues outnumbered decliners by a 2.25-to-1 ratio on the NYSE and by a 1.32-to-1 ratio on the Nasdaq.

The S&P 500 posted 7 new 52-week highs and one new low while the Nasdaq Composite recorded 48 new highs and 19 new lows.