U.S. consumer prices barely increased in July as the cost of gasoline declined for a second straight month, while underlying inflation was benign, further reducing expectations of an interest rate hike from the Federal Reserve next month.
"The numbers came in right in line. The market's reaction is slightly positive because the market was fearful it was going to come in worse than it did. You're seeing a market thinking that the Fed is not being pushed toward a rate hike," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
Eight of the 11 S&P 500 sector indexes rose, led by real estate .SPLRCR, up 1.08%, followed by a 1.06% gain in information technology .SPLRCT.
Wall Street's fear gauge, the Cboe Volatility Index .VIX, dipped 0.8 point to 14.45, its lowest level since January.
Traders are now pricing in a 62% chance of the Fed holding rates at its September meeting, according to CME's FedWatch Tool. Before the July inflation data was released, bets were split between a hike and no change.
Cava Group CAVA.N advanced 14.2% after the restaurant chain beat Wall Street expectations for second-quarter sales and core profit.
Lumentum Holdings LITE.O surged 13.6% after the photonic product maker forecast first-quarter revenue above analysts' expectations and beat fourth-quarter estimates.
Across the U.S. stock market .AD.US, advancing stocks outnumbered falling ones by a 1.7-to-one ratio.
The S&P 500 posted 19 new highs and 2 new lows; the Nasdaq recorded 123 new highs and 95 new lows.
Volume on U.S. exchanges was relatively light, with 15.5 billion shares traded, compared with an average of 17.5 billion shares over the previous 20 sessions.
SPY•
