Stocks take a hop as hopes build for interest rate cut next month

The US stock market is climbing toward records after data showed inflation across the country was a touch better last month than economists expected.

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The S&P 500 rose 0.5% in early trading Tuesday. The Dow Jones Industrial Average was up 202 points, while the Nasdaq composite was 0.5% higher. Stocks got a lift from expectations that the better-than-expected inflation report will give the Federal Reserve more leeway to cut interest rates. Treasury yields fell in the bond market as expectations solidified among traders that the Fed will cut rates for the first time this year in September.

Wall Street took the postponement of the U.S.-China tariff deadline in stride and refocused on inflation numbers arriving Tuesday that may play an outsized roll in the decision by the Federal Reserve about weather to cut rates, as President Donald Trump is demanding, or stand pat.

Futures for the S&P 500, Dow Jones Industrial Average and Nasdaq were all nearly unchanged before the bell.

President Donald Trump signed an executive order late Monday putting on hold a possible showdown between the world’s two major economies to allow 90 more days for more talks on a broad trade agreement. Without an extension, taxes on Chinese imports might have jumped from an already high 30%.

Beijing acted in kind.

The reprieve makes room for a possible deal with Trump, but also prolongs the uncertainty that has bedeviled companies and households since the president began escalating his trade war.

"The extension isn’t about goodwill; it’s about keeping oxygen in the room for deals that matter," Stephen Innes of SPI Asset Management said in a commentary.