By Lucia Mutikani

WASHINGTON (Reuters) – U.S. consumer prices rose more than expected in January amid a surge in the cost of rental housing, but the pick-up in inflation did not change expectations the Federal Reserve will start cutting interest rates in the first half of this year.

The increase in prices reported by the Labor Department on Tuesday was the largest in four months and occurred against the backdrop of labor market strength and economic resilience. But January is typically a strong month for inflation readings as businesses push through prices increases at the start of the year, which some economists believed were not completely addressed by the model used by the government to strip out seasonal fluctuations from the data.

They also pointed out that not all the drivers of inflation last month would go into the calculation of the personal consumption expenditures (PCE) price indexes, the measures tracked by the U.S. central bank to gauge progress toward its 2% inflation target.

Inflation is slowing, but probably not fast enough to encourage Fed officials to start easing rates soon.

“It’s important not to overreact and jump to the assumption that an inflationary resurgence is developing,” said Seema Shah, chief global strategist at Principal Asset Management. “Inflation was partially driven by segments that are less important for the Fed’s favored core PCE measure, while forward looking indicators suggest they will ease over the coming months.”

The consumer price index (CPI) increased 0.3% last month after gaining 0.2% in December, the Labor Department’s Bureau of Labor Statistics said. Shelter, which includes rents, accounted for more than two-thirds of the rise in the CPI.

Food prices rose 0.4%, the most in a year, which was partly blamed on winter storms. Grocery food inflation also increased 0.4%, the largest gain since January 2023, boosted by more expensive sugar and sweets as well as fats and oils, fruits and vegetables.

Prices for nonalcoholic beverages shot up 1.2%. But cereals and bakery products were cheaper. Prices for meat, eggs and fish were unchanged. Gasoline prices dropped 3.3%.

In the 12 months through January, the CPI increased 3.1% after advancing 3.4% in December. Economists polled by Reuters had forecast the CPI would gain 0.2% on the month and rise 2.9% on a year-on-year basis. The annual increase in consumer prices has moderated from a peak of 9.1% in June 2022.

Annual revisions to the CPI data published last Friday generally showed inflation on a downward trend after surging in 2022. Inflation is one of the key campaign issues in the Nov. 5 U.S. presidential election.

President Joe Biden in a statement focused on the moderation in annual inflation, but acknowledged that “we know there’s still work to do to lower costs.”

Financial markets pushed back their interest rate-cut expectations to June from May after the release of the CPI report.

Stocks on Wall Street were trading lower. The dollar rose against a basket of currencies. U.S. Treasury prices fell.

NO RUSH TO CUT RATES

Policymakers have said they are in no hurry to start lowering borrowing costs and want convincing evidence that inflation is on a sustained slow path. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25%-5.50% range.

Excluding volatile food and energy components, the CPI rose 0.4% last month. That was the largest advance since last May and followed a 0.3% increase in December. The so-called core CPI was boosted by a 0.6% surge in shelter after gaining 0.4% in December. Owners’ equivalent rent (OER), a measure of the amount homeowners would pay to rent or would earn from renting their property, jumped 0.6%. That was the biggest increase in nine months and followed a 0.4% rise in December.

New weights published last week increased housing’s share and trimmed that of new and used cars. Those were used to calculate the January CPI data, together with updated seasonal factors. Rental inflation has remained elevated despite evidence that the price of rent demands is going down.

Rent measures in the CPI tend to lag the independent gauges by several months. There is also a large stock of apartment buildings in the pipeline, adding to economists’ expectations that rents will lead inflation lower this year.

Economists believe OER’s slightly bigger share in the CPI will contribute to lower inflation readings this year, if the official rent measures start to align with the private gauges, as expected.

Prices for hotel and motel rooms rebounded as did those for airline fares in January. Motor vehicle insurance prices increased further. Medical care services increased 0.7%, with the cost of hospital services surging 1.6%, the most since October 2015. The cost of health insurance rose solidly, but prescription medication prices recorded their biggest decline since February 2021.

Medical care services in the CPI do not go into the calculation of the PCE price indexes.

“January is often subject to seasonal-adjustment-busting one-time price increases, especially in services, so this is less a red flag as a watch-this-space sort of thing,” said Mark Streiber, an economic analyst at FHN Financial in New York.

Services inflation jumped 0.7%, the biggest gain in a year, after advancing 0.4% in December. Excluding rental shelter, services rose 0.6%, also the largest increase since January 2023, after gaining 0.4%.

Used car and truck prices dropped 3.4%, the largest decrease since May 1969. Apparel prices fell by the most in nearly three years. Goods prices dropped 0.3% after being unchanged in December. The core CPI advanced 3.9% on a year-on-year basis, matching December’s increase.

With the CPI data in hand, economists estimated the core PCE price index increased 0.3% in January after gaining 0.2% in December. Core inflation is forecast to rise 2.7% on a year-on-year basis after increasing 2.9% in December.

These estimates could change depending on the outcome of producer price data for January, which is due to be released on Friday.

“The good news is that the economy at large remains resilient, and we think the precise timing of cuts to come, whether that be in May, June or July, matters less than the direction,” said Elyse Ausenbaugh, global investment strategist at J.P. Morgan Global Wealth Management.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama, Andrea Ricci and Paul Simao)

(Reuters) – China’s BYD Co Ltd is planning to set up a new manufacturing plant in Mexico, Nikkei reported on Wednesday, citing the company’s Mexico head, as the electric vehicle maker aims to establish an export hub to the United States.

BYD, which overtook its biggest rival Tesla Inc to become the top EV maker in terms of sales in the previous quarter, has launched a feasibility study for a new plant in Mexico and is negotiating with government officials at various levels for location and other terms, Nikkei reported.

BYD, which has its sales concentrated in China, aims to expand its global presence and is building new plants overseas in addition to expanding exports from China.

“Overseas production is indispensable for an international brand”, Zhou Zou, country manager of BYD Mexico told Nikkei.

In Latin America, BYD plans to spend 3 billion real($605.94 million) to build a plant in Brazil, Nikkei reported.

($1 = 4.9510 reais)

(Reporting by Sameer Manekar in Bengaluru; Editing by Shweta Agarwal)

By Johann M Cherian and Ankika Biswas

(Reuters) – Wall Street’s main indexes slid on Tuesday, hitting one-week lows, after a hotter-than-expected consumer inflation reading drove U.S. Treasury yields higher, pushing back market speculations for imminent interest rate cuts.

A Labor Department report showed U.S. consumer prices increased more than expected in January amid rises in the costs of shelter and healthcare.

Rate-sensitive megacaps like Microsoft, Alphabet, Amazon.com and Meta Platforms <META.O> lost between 0.7% and 1.6%, as yields on U.S. Treasury notes across the board spiked to two-month highs. [US/]

Most chip stocks such as Micron Technology, Qualcomm and Broadcom dropped between 1.6% and 3.3%, sending the Philadelphia SE Semiconductor index down 1.1%.

Real estate and consumer discretionary led losses among the 11 major S&P 500 sector indexes, with real estate falling to an over two-month low.

The small-caps Russell 2000 index also shed 2.7%, on track for its worst day in nearly a year.

Trader bets for an at least 25-basis-point rate reduction in May dropped to 38.7%, from about 58% before the data, while expectations for June stood at 78%, the CME FedWatch tool showed.

“We’ve now gotten multiple upside surprises in inflation that’s come from wages, but markets has dismissed that and clung to this idea that the Fed is going to still cut rates,” said Lara Rhame, chief U.S. economist at FS Investments.

“Today, market sentiment is getting a reality check and you just cannot escape the fact that the Fed may have to be more cautious.”

The latest data comes on the heels of a modest revision to inflation in the last quarter of 2023 that left investors briefly relieved on the trajectory of inflation.

The Cboe volatility index, a market fear gauge, hit an over two-week high.

At 11:24 a.m. ET, the Dow Jones Industrial Average was down 405.89 points, or 1.05%, at 38,391.49, the S&P 500 was down 52.30 points, or 1.04%, at 4,969.54, and the Nasdaq Composite was down 189.84 points, or 1.19%, at 15,752.71.

Wall Street has been on a rally, with the benchmark S&P 500 gaining in 14 out of the past 15 weeks, the first time since March 1972. The Dow is also trading at a record high level, and on Monday the Nasdaq briefly surpassed its record closing high from November 2021.

Among top movers, JetBlue Airways jumped 15% after activist investor Carl Icahn reported a 9.91% stake, adding that the carrier’s stock is ‘undervalued’.

Arista Networks shed 4.3% after the cloud solutions provider forecast current-quarter adjusted gross margin below expectations, while Marriott International lost 5.8% after the hotel operator forecast annual profit below Street expectations.

Software firm Cadence Design Systems dropped 3.8% following a bleak quarterly sales forecast, while toymaker Hasbro lost 6.5% after a steeper-than-expected drop in holiday-quarter sales and profit.

Tripadvisor jumped 14.3% as the online travel agency formed a special committee to evaluate proposals that may result in a deal.

Declining issues outnumbered advancers for a 9.63-to-1 ratio on the NYSE and a 4.34-to-1 ratio on the Nasdaq.

The S&P index recorded 15 new 52-week highs and six new lows, while the Nasdaq recorded 27 new highs and 68 new lows.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Additional reporting by Medha Singh; Editing by Maju Samuel)

By Johann M Cherian and Ankika Biswas

(Reuters) – Wall Street’s main indexes slid on Tuesday, hitting one-week lows, after a hotter-than-expected consumer inflation reading drove U.S. Treasury yields higher, smashing market speculations for imminent interest rate cuts.

A Labor Department report showed U.S. consumer prices increased more than expected in January amid rises in the costs of shelter and healthcare.

Rate-sensitive megacaps like Microsoft, Alphabet, Amazon.com and Meta Platforms <META.O> lost between 1.2% and 2.2%, as yields on U.S. Treasury notes across the board spiked to two-month highs. [US/]

Chip stocks such as Micron Technology, Advanced Micro Devices and Broadcom dropped between 2.5% and 4.5%, sending the Philadelphia SE Semiconductor index down 2.5%.

Real estate and consumer discretionary led losses among the 11 major S&P 500 sector indexes, with real estate falling to an over two-month low.

Trader bets for an at least 25-basis-point rate reduction in May dropped to 38%, from about 58% before the data, the CME FedWatch tool showed.

“Tuesday’s stronger-than-expected CPI print may cause the Fed to delay its rate cuts past May and June, which is when the market expects the Fed to begin cutting,” said Skyler Weinand, chief investment officer at Regan Capital.

“Getting to the Fed’s magical 2% inflation target may prove more difficult than expected and result in elevated interest rates for a longer period of time.”

The latest data comes on the heels of a modest revision to inflation in the last quarter of 2023 that left investors moderately relieved on the trajectory of inflation.

The Cboe volatility index, a market fear gauge, hit an over two-week high.

At 9:42 a.m. ET, the Dow Jones Industrial Average was down 427.32 points, or 1.10%, at 38,370.06, the S&P 500 was down 66.94 points, or 1.33%, at 4,954.90, and the Nasdaq Composite was down 303.61 points, or 1.90%, at 15,638.94.

The small caps Russell 2000 index also shed 1.8%.

Wall Street has been on a rally, with the benchmark S&P 500 gaining in 14 out of the past 15 weeks, the first time since March 1972. The Dow is also trading at a record high level, and on Monday the Nasdaq briefly surpassed its record closing high from November 2021.

Among top movers, JetBlue Airways jumped 11.3% after activist investor Carl Icahn reported a 9.91% stake, adding that the carrier’s stock is ‘undervalued’.

Coca-Cola rose 1.2% as the beverage maker surpassed expectations for fourth-quarter revenue, benefiting from higher product prices and buoyant demand.

Arista Networks shed 5.1% after the cloud solutions provider forecast current-quarter adjusted gross margin below expectations.

Software firm Cadence Design Systems dropped 2.7% following a bleak quarterly sales forecast, while toymaker Hasbro lost 3.3% after a steeper-than-expected drop in holiday-quarter sales and profit.

Tripadvisor jumped 16.1% as the online travel agency formed a special committee to evaluate proposals that may result in a deal.

Declining issues outnumbered advancers for a 10.55-to-1 ratio on the NYSE and a 5.65-to-1 ratio on the Nasdaq.

The S&P index recorded 14 new 52-week highs and no new lows, while the Nasdaq recorded 19 new highs and 45 new lows.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Additional reporting by Medha Singh; Editing by Maju Samuel)

(Reuters) – Wall Street’s main indexes slid at open on Tuesday after a hotter-than-expected consumer inflation reading drove U.S. Treasury yields higher, squashing market speculations for imminent interest rate cuts.

The Dow Jones Industrial Average fell 98.21 points, or 0.25%, at the open to 38,699.17. The S&P 500 opened lower by 53.90 points, or 1.07%, at 4,967.94, while the Nasdaq Composite dropped 343.67 points, or 2.16%, to 15,598.88 at the opening bell.

(Reporting by Johann M Cherian in Bengaluru; Editing by Maju Samuel)

By Shivansh Tiwary

(Reuters) -Shares of JetBlue Airways surged 13% in early trading on Tuesday after activist investor Carl Icahn said he took a nearly 10% stake in the low-cost carrier.

Icahn said his company had been in discussion with JetBlue about possible board representation after the airline’s $3.8 billion merger with ultra-low-cost carrier Spirit Airlines was blocked by a U.S. judge last month.

Both airlines have asked for an expedited appeal to the judge’s ruling and a U.S. appeal court will hear arguments in June.

Icahn, in the filing, called shares of JetBlue undervalued, saying it represented an attractive investment opportunity. He has made a career out of buying companies he sees as undervalued and the JetBlue purchase is one of his first big moves in 2024.

“We are always open to constructive dialogue with our investors,” JetBlue said on Tuesday.

Many analysts had questioned the merits of the deal over fears Spirit’s grim financial health may become a drag for JetBlue. “JetBlue dodges a bullet,” J.P. Morgan analysts had said after the judge blocked the deal.

Last month, the airline said it was evaluating deeper cost cuts after it forecast higher expenses and a fall in revenue in the current quarter as it grapples with uneven travel demand.

Wild swings in travel demand between peak and off-peak periods have forced airlines to adjust schedules and capacity to more profitable routes.

JetBlue has said it will move underperforming capacity to premium leisure and popular markets.

The company’s stock has gained 24% since the merger ruling.

“Key items to watch are what Icahn can or cannot do on the board level, to put ‘Neutral/High Risk-rated’ JetBlue on a better strategic path,” Citi analyst Stephen Trent wrote in a note.

(Reporting by Shivansh Tiwary in Bengaluru; Editing by Sriraj Kalluvila)

By Carolina Mandl, Johann M Cherian and Ankika Biswas

(Reuters) -The Nasdaq slipped on Monday afternoon after briefly surpassing its record closing high from November 2021, while the Dow rose modestly ahead of two U.S. inflation reports this week that could influence Federal Reserve policy.

The benchmark S&P 500 closed slightly lower but remained just above the 5,000-point level it crossed on Friday.

Traders awaited January’s Consumer Price Index (CPI) and Producer Price Index (PPI) this week to gauge prospects for interest rate cuts. This week the market also gets data on industrial production, retail sales and preliminary University of Michigan consumer sentiment.

“The CPI report tomorrow will be just another important data point on where inflation is and that will translate to the pace of when we may see a cut in the Fed funds rate,” said Michael Rosen, chief investment officer at Angeles Investments. “No one wants to make a big bet one way or the other.”

The Nasdaq lost steam in the afternoon after rising early in the session past its highest closing level hit in November 2021, within a percentage point of its all-time intra-day high of 16,212.229.

“An inflation number that’s really hot might get some investors a bit nervous, but other than that the Fed is going to be in the same mode,” said Joe Saluzzi, co-manager of trading at Themis Trading.

Over the past four months, megacaps with greater exposure to artificial intelligence have spearheaded a bull market on Wall Street as other stocks also rose on hopes of imminent rate cuts and an upbeat outlook from businesses.

During the session, Nvidia crossed above Amazon.com in market capitalization, as the euphoria around AI catapulted the chipmaker to the fourth-most valuable U.S. company, but ended the day behind the online retailer. Nvidia ended the day up 0.16%, while Amazon dipped 1.2%.

With recent data reflecting a robust economy, central bankers have shown less eagerness for early rate cuts. The odds for at least a 25-basis-point rate reduction in May have dropped to 52.2%, from over 95% at the start of 2024, as per the CME FedWatch Tool.

The S&P 500 lost 4.12 points, or 0.08%, to end at 5,022.49 points, while the Nasdaq Composite lost 42.74 points, or 0.27%, to 15,947.92. The Dow Jones Industrial Average rose 135.76 points, or 0.35%, to 38,807.45.

The small caps Russell 2000 index climbed 1.9%.

“Investors are rotating into those areas that have not kept pace with the broader market because that’s possibly where there is greater value,” said Sam Stovall, chief investment strategist at CFRA Research. “Today could be sort of a bottom fishing day for the market.”

Among other movers, Diamondback Energy jumped 9.4%, helping energy to top the 11 S&P 500 sectors with gains. Diamondback announced a $26-billion deal to buy the largest privately held oil and gas producer in the Permian basin, Endeavor Energy Partners.

Joby Aviation gained 6.4% as the electric-powered aircraft maker signed an agreement to launch air taxi services in the United Arab Emirates by early 2026.

On the Nasdaq 2,835 issues advanced and 1,452 declined as a 1.95-to-1 ratio favored advancers. On the NYSE advancing issues outnumbered declining ones by a 3.4-to-1 ratio. There were 592 new highs and 46 new lows.

The S&P 500 posted 53 new 52-week highs and no new lows while the Nasdaq recorded 344 new highs and 53 new lows.

On U.S. exchanges 11.14 billion shares changed hands compared with the 11.72 billion moving average for the last 20 sessions.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Maju Samuel and David Gregorio)

By Johann M Cherian, Ankika Biswas and Carolina Mandl

(Reuters) – The Nasdaq slipped on Monday afternoon after briefly surpassing its record closing high from November 2021, but the Dow and the S&P 500 rose modestly ahead of two U.S. inflation reports this week that could influence Federal Reserve policy.

Nvidia overtook Amazon.com in value, but Nasdaq lost some steam after nearing its all-time intra-day high of 16,212.229.

Over the past four months, megacaps with greater exposure to artificial intelligence have spearheaded a bull market on Wall Street as other stocks also rose on hopes of imminent rate cuts and an upbeat outlook from businesses.

The benchmark S&P 500 remained above the 5,000-point level it crossed on Friday and was trading at record high levels along with the blue-chip Dow.

Leading the charge, Nvidia surpassed Amazon.com in market capitalization, as the euphoria around AI catapulted the chipmaker to the fourth-most valuable U.S. company. Nvidia was up 0.1%, while Amazon dipped 1%.

“Earnings are coming in better than expected, the forecast for inflation continues to decline and the Fed is still likely to lower rates, Wall Street is having a hard time finding something to go wrong with the stock market rally,” said Sam Stovall, chief investment strategist at CFRA Research.

Traders awaited January’s Consumer Price Index (CPI) and Producer Price Index (PPI) this week to gauge prospects for interest rate cuts this year. This week the market also gets data on industrial production, retail sales and preliminary University of Michigan consumer sentiment.

“An inflation number that’s really hot might get some investors a bit nervous, but other than that the Fed is going to be in the same mode,” said Joe Saluzzi, co-manager of trading at Themis Trading.

With data reflecting a robust economy, central bankers have shown less eagerness for early rate cuts. The odds for at least a 25-basis-point rate reduction in May have dropped to 52.2%, from over 95% at the start of 2024, as per the CME FedWatch Tool.

At 1:52 p.m., the S&P 500 gained 6.01 points, or 0.12%, to 5,032.62 points, while the Nasdaq Composite lost 12.13 points, or 0.08%, to 15,978.54. The Dow Jones Industrial Average rose 196.04 points, or 0.51%, to 38,867.73.

The small caps Russell 2000 index also surged 1.8%.

“Investors are rotating into those areas that have not kept pace with the broader market because that’s possibly where there is greater value,” said Stovall. “Today could be sort of a bottom fishing day for the market.”

Among other movers, Diamondback Energy jumped 9.2%, helping energy to top the 11 S&P 500 sectors with a 1.16% gain. Diamondback announced a $26-billion deal to buy the largest privately held oil and gas producer in the Permian basin, Endeavor Energy Partners.

Joby Aviation gained 6.6% as the electric-powered aircraft maker signed an agreement to launch air taxi services in the United Arab Emirates by early 2026.

Advancing issues outnumbered decliners by a 4.3-to-1 ratio on the NYSE and by a 2.32-to-1 ratio on the Nasdaq.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Maju Samuel and David Gregorio)

Elon Musk, who has never shied away from controversy, is yet again the center of attention over claims that Russian forces are using Starlink satellites powered by his SpaceX. Russian Media reports indicate that the Russian troops have been using Starlink terminals in some of the occupied territories. Launched in February of 2022, the satellites were intended to enhance battlefield communications for Ukrainian forces.

Starlink Networks Infiltration

The Starlink networks have enabled Ukrainian forces to communicate via secure internet chat apps. Additionally, they have allowed the troops to stay in contact with each other without relying on cell or radio signals that can be intercepted easily.

Ukraine’s Main Directorate of Intelligence insists that there is mounting evidence of the equipment being operated by Russian forces, mostly in the Donetsk area. According to the agency, radio interceptions of conversations affirm the suspicion that Starlink terminals have been installed in units of the Russia brigade operating in the Donetsk region.

The agency also claims to have intercepted an exchange between two soldiers who were discussing setting up the Starlink terminals. The intelligence services have already posted an audio clip affirming what appears to be an exchange between Russian soldiers on the Starlink network. What’s not clear is how the Russian soldiers got hold of the terminals, whether they had procured from abroad or from captured Ukrainian forces.

Russia insists that the Starlink networks have never been supplied to its forces because they are not certified systems. On the other hand, Starlink has hit back over the infiltration claims, insisting that Russia has never operated or marketed its satellite networks. While Starlink systems cannot be purchased in Russia, there have been claims that Russian forces are purchasing the devices from other countries and bringing them to the battlefront.

Musk has also reiterated in a post on X, formerly Twitter, that they have never sold Starlink terminals to Russia, and the report is only false. “To the best of our knowledge, no Starlinks have been sold directly or indirectly to Russia,” Musk said.

SpaceX insists that whenever it obtains knowledge of Starlink terminals being in the wrong hands and used by unsanctioned parties, it investigates the claim and deactivates the terminal thereafter. The space company further states that new users of the Starlink equipment must go through an authentication process to start using the service. SpaceX can track Starlink network users within a specific geographic region. However, determining whether users are Russia or Ukraine in the ongoing war might prove to be a big challenge.

Starlink Politics

It is not the first time that Musk and SpaceX have found themselves in trouble over access to Starlink networks. The satellites have always been politically charged since Musk decided to make them available to Ukrainian forces. In September of 2022, Musk declined a request to make Starlink services available in Sevastopol over claims it could be used to sink Russian ships, which could make it complicit in a major act of war.

When SpaceX said it could no longer make the satellites available to Ukrainian forces last year due to escalating costs, the US Pentagon agreed to pay to keep the services running. In the recent past, private donors, governments, and other organizations have also donated funds to ensure Ukrainian forces have access to it.

By Johann M Cherian and Ankika Biswas

(Reuters) -U.S. stocks climbed on Monday, with the tech-laden Nasdaq inching close to its all-time high as investors geared up for two crucial inflation reports during the week, while Nvidia overtook Amazon in value for the first time in two decades.

Nasdaq rose past its highest closing level hit in November 2021, bringing it within a percentage from its all-time intra-day high of 16,212.229.

Over the past four months, megacaps with greater exposure to artificial intelligence have spearheaded a bull market on Wall Street, also riding on hopes of imminent rate cuts and an upbeat outlook from businesses.

The benchmark S&P 500 crossed the psychological 5,000-point level on Friday and is trading at record high levels along with the blue-chip Dow.

Leading the charge, Nvidia crossed above Amazon.com in market capitalization, as the euphoria around AI catapulted the chipmaker to the fourth-most valuable U.S. company. Nvidia was up 2.6%, while Amazon dipped 0.4%.

“A lot of people earlier in the year may have thought we were set for a bit of pullback in the semiconductor sector and it didn’t happen, so it’s certainly people saying, I don’t want to miss the performance like I did last year,” said Joe Saluzzi, co-manager of trading at Themis Trading.

Traders await January’s Consumer Price Index (CPI) and Producer Price Index (PPI) this week to determine the timeline for monetary policy easing this year. Other data through the week also include industrial production, retail sales and preliminary University of Michigan consumer sentiment.

“An inflation number that’s really hot might get some investors a bit nervous, but other than that the Fed is going to be in the same mode,” Saluzzi added.

With growing data reflecting a robust economy, central bankers have effectively pushed back against traders’ bets for early rate cuts. The odds for at least a 25-basis-point rate reduction in May have dropped to 55.8%, from over 95% at the start of 2024, as per the CME FedWatch Tool.

Remarks from Federal Reserve officials including Richmond President Thomas Barkin and Minneapolis chief Neel Kashkari, scheduled through the day, will be scrutinized for any hints on the timing for rate cuts.

At 11:57 a.m. ET, the Dow Jones Industrial Average was up 202.88 points, or 0.52%, at 38,874.57, the S&P 500 was up 19.56 points, or 0.39%, at 5,046.17, and the Nasdaq Composite was up 74.54 points, or 0.47%, at 16,065.20.

The small caps Russell 2000 index also surged 1.8%.

Among other movers, Diamondback Energy jumped 10.2%, helping energy to top the 11 S&P 500 sectors with a 1.0% gain, after announcing a $26-billion deal to buy the largest privately held oil and gas producer in the Permian basin, Endeavor Energy Partners.

Joby Aviation gained 8.2% as the electric-powered aircraft maker signed an agreement to launch air taxi services in the Emirate by early 2026.

Advancing issues outnumbered decliners by a 4.00-to-1 ratio on the NYSE and by a 2.45-to-1 ratio on the Nasdaq.

The S&P index recorded 45 new 52-week highs and no new lows, while the Nasdaq recorded 149 new highs and 29 new lows.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Maju Samuel)