STORY: U.S. stocks rose to a near two-week high Tuesday after softer producer prices data reinforced bets of an interest-rate cut by the Federal Reserve in September.
The Dow added 1 percent, the S&P 500 gained nearly 1.7% and the Nasdaq jumped 2.4%
Producer prices climbed less than expected in July.
And in the 12 months through July, the PPI increased 2.2% after climbing 2.7% in June.
Consumer Prices come out Wednesday.
Traders now see a 55% chance of a 50-basis-point rate cut by the U.S. central bank next month, from less than 50% before the report, according to CME's FedWatch Tool.
The other 45% see a 25 basis point cut, though Adam Coons, co-chief investment officer at Winthrop Capital Management, said he thinks the Fed will keep rates unchanged.
“You're going to see the Fed really want to see continued momentum to a labor market, the softening inflation that's softening before they're going to ever cut rates. So, we think it's more likely that they're probably going to wait until the very end of the year. Maybe past elections before they start to cut interest rates simply because they do not want to get it wrong. Cut rates and then have to increase them again because we see a flare up in inflation.”
Stocks on the move included Starbucks, which skyrocketed 24.5%, its biggest one-day percentage gain ever, after the coffee chain appointed Chipotle head Brian Niccol as chairman and CEO.
Chipotle shares fell 7.5%.
And JetBlue dropped nearly 5%. It plunged more than 20% Monday after ratings agencies S&P and Moody's downgraded the airline after it unveiled plans to raise more than $3 billion in debt.
