Latest Inflation Data Sends Stocks Higher

Wall Street ticked higher Wednesday after the latest update on inflation came in almost exactly as economists expected.

• The S&P 500 rose 20.78 points, or 0.4%, to 5,455.21.
• The Dow Jones Industrial Average rose 242.75 points, or 0.6%, to 40,008.39.
• The Nasdaq composite rose 4.99 points, or less than 0.1%, to 17,192.60.

Treasury yields were steady after the US government said consumers paid prices for food, gasoline, and other things last month that were 2.9% higher than a year earlier.

On Wall Street, Kellanova rose 7.8% after Mars said it would buy the company behind Pringles, Cheez-Its, and Kellogg's for $83.50 per share in cash. The companies put the deal's total value at $35.9 billion, including debt. Kellanova was created when the Kellogg Co. split into three companies in the summer of 2022. Cardinal Health rose 3.7% after joining the parade of companies that have reported stronger profit for the spring than analysts expected. On the losing end was Brinker International, the company behind Chili's and Maggiano's restaurants. It fell 10.7% after reporting weaker profit for the latest quarter than expected. That was despite strengthening sales trends at Chili's, which got a boost from higher prices, increased traffic, and the launch of its "Big Smasher" burger.

The inflation data should keep the Federal Reserve on track to cut its main interest rate at its next meeting in September, a move that Wall Street has long been looking forward to, the AP reports. The only question is how big the first cut to rates since the 2020 COVID crash will be: the traditional quarter of a percentage point or a more dramatic half point?

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Wednesday's reading on inflation at the consumer level wasn't as cool as the prior day's update on inflation at the wholesale level, but it likely doesn't change much, according to Chris Larkin, managing director, trading and investing at E-Trade from Morgan Stanley. If most of the data over the next few weeks points to a slowing economy, he said the Fed may cut more aggressively. That includes a report coming up Thursday about how much US shoppers spent at retailers. While the economy is still growing, and many economists see a recession as unlikely, worries have risen about its strength after a much worse-than-expected month of hiring by US employers in July.

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