NEW YORK — Stocks climbed Tuesday as Wall Street prepared for an upcoming update on inflation that will hopefully show a smaller increase in pain for everyone.
The S&P 500 rose 29.73, or 0.7%, to 4,439.26. The Dow Jones Industrial Average gained 317.02 points, or 0.9%, to 34,261.42, and the Nasdaq composite added 75.22, or 0.5%, to 13,760.70.
Activision Blizzard jumped 10% for one of the market's larger gains after a judge ruled Microsoft could move forward on its $69 billion takeover of the video game maker. Salesforce was the biggest force driving the Dow after climbing 3.9% on price increases announced for its products. Amazon also pushed the market upward and rose 1.3% on the first day of its annual Prime Day sales event.
Much of Wall Street's gains for the day came at the end of trading, with about a third of the S&P 500's rise happening in the final 20 minutes. The week’s main event will arrive Wednesday, when the U.S. government will offer the latest update on inflation at the consumer level. Economists expect to see another slowdown, with prices 3.1% higher in June than a year earlier, down from inflation of 4% in May and just above 9% last summer.
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The hope on Wall Street is that a continued easing in inflation will convince the Federal Reserve to stop its hikes to interest rates soon. High rates have helped pull down inflation, but they’ve also caused cracks in the banking, manufacturing and other industries while also hurting prices for stocks and other investments.
Later in the week, companies will begin telling investors how much profit they made during the spring, and expectations are largely dim. Analysts are forecasting the sharpest drop in earnings per share for S&P 500 companies since the pandemic was crushing the global economy in the spring of 2020.
This upcoming reporting season could mark the trough for corporate profit declines, according to strategists at Bank of America. They point to some resilient trends in the economy, as well as how many companies are offering forecasts for upcoming results that are above analysts' expectations.
“We expect companies to sound more upbeat than in prior quarters,” strategists wrote.
In the bond market, Treasury yields were mixed after rising last week on expectations the Fed will keep interest rates higher for longer in its campaign to get inflation under control.
The 10-year Treasury yield slipped to 3.97% from 4.00% late Monday. It helps set rates for mortgages and other loans.
The two-year Treasury yield, which moves more on expectations for the Fed, inched up 4.88% from 4.86%.
