The S&P 500 and Nasdaq have reached their highest closes in 14 months after data showed consumer prices rose modestly in May, boosting bets that the Federal Reserve will not raise interest rates this month.
Nvidia jumped 3.9 per cent, becoming the first chipmaker to end a trading session with a market capitalisation above $US1 trillion ($A1.5 trillion) after smaller rival Advanced Micro Devices gave an update on its artificial intelligence strategy that failed to impress investors.
AMD dropped 3.6 per cent.
Stocks advanced after a US Labor Department report showed the consumer price index (CPI) rose 0.1 per cent last month following a 0.4 per cent jump in April, with core inflation unchanged at 0.4 per cent.
On a year-on-year basis, headline inflation increased by a less than estimated 4.0 per cent, reflecting declines in the cost of energy products and services, including petrol and electricity.
“If the Fed was looking for data to point to say, ‘We’re going to pause in June,’ I think they got it today,” said Liz Young, head of investment strategy at SoFi in New York.
“But it’s another one of those that you can cut whichever way you want to make your case. If you want to be bullish, you say inflation is down more than 50 per cent since its peak. If you want to be bearish, you can say inflation is still more than twice the Fed’s target,” Young said.
Traders have priced in a 93 per cent chance that the US central bank will hold interest rates at the 5.0 per cent-5.25 per cent range on Wednesday, and 62 per cent odds of 25-basis-point hike in July, according to the CME Fedwatch tool.
The benchmark S&P 500 has recovered about 22 per cent from its October 2022 closing low, fuelled in large part by gains in market heavyweights such as Apple Inc, Nvidia Corp and Tesla Inc.
More recently, sectors such as energy and materials have climbed as well as small-cap stocks.
US-listed shares of Chinese companies rose after China’s central bank lowered its short-term lending rate for the first time in 10 months.
Alibaba Group gained 1.9 per cent and JD.com jumped 3.5 per cent.
The S&P 500 climbed 0.69 per cent to end the session at 4,369.01 points, the Nasdaq gained 0.83 per cent to 13,573.32 points and the Dow Jones Industrial Average rose 0.43 per cent to 34,212.12 points.
Volume on US exchanges was relatively heavy, with 11.6 billion shares traded, compared to an average of 10.6 billion shares over the previous 20 sessions.
Ten the 11 S&P 500 sector indexes rose, led by materials, up 2.33 per cent, followed by a 1.16 per cent gain in industrials .
The small-cap Russell 2000 index jumped 1.2 per cent to a three-month high.
Intel Corp gained 2.5 per cent after a report the chipmaker is in talks with SoftBank Group Corp’s Arm to be an anchor investor in its initial public offering.
Bunge Ltd rallied 2.5 per cent after the US grains merchant and Glencore-backed Viterra said they were merging to create an agricultural trading giant worth about $US34 billion, including debt.
The most traded stock in the S&P 500 was Tesla Inc, with $US40.8 billion worth of shares exchanged during the session. The shares rose 3.55 per cent.
Advancing issues outnumbered falling ones within the S&P 500 by a 4-to-1 ratio.
The S&P 500 posted 43 new highs and no new lows; the Nasdaq recorded 135 new highs and 47 new lows.