The Nasdaq led the charge on Wall Street on Tuesday after data showed inflation rose largely in line with estimates, lifting growth stocks that were hammered by a surge in Treasury yields on expectations of aggressive U.S. interest rate hikes.
The Labor Department's report showed consumer prices surged to 8.5% in the 12 months through March, slightly higher than the estimated 8.4%, but investors focused on the so-called core CPI that fell short of estimates at 6.5%.
"Inflation is still a really big part of the macro narrative here (but) we're seeing some encouraging signs beneath the surface," said Mike Reynolds, vice president of investment strategy at Glenmede.
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"Market has been picking up today on the fact that the CPI was a bit softer than expected... Anything that indicates a softening momentum on the inflation front is going to mean that the Fed perhaps may not have to go as aggressively in tightening monetary policy."
Reflecting the sentiment, the benchmark U.S. 10-year Treasury yield fell to 2.70% after scaling 2.83% earlier in the day, a level last seen in late 2018.
Money markets still expect a 93.5% likelihood of a 50 basis point rate hike at the Fed's meeting next month, largely unchanged from before the data. IRPR
The retreat in yields offered some relief to megacap growth and technology stocks such as Tesla Inc, Apple Inc and Amazon.com Inc, which rose between 1.9% and 2.3%.
The Nasdaq remains down nearly 13% for the year, the worst performer among the three major indexes.
Big U.S. banks are set to kick off first-quarter earnings season on Wednesday. Analysts expect them to report a sharp decline in earnings from a year earlier, when they benefited from exceptionally strong dealmaking, trading and funds set aside for loan losses being released.
At 12:02 a.m. ET, the Dow Jones Industrial Average was up 235.26 points, or 0.69%, at 34,543.34, the S&P 500 was up 38.90 points, or 0.88%, at 4,451.43, and the Nasdaq Composite was up 162.29 points, or 1.21%, at 13,574.24.
The energy sector jumped 3.2%, briefly hitting its highest level since 2015, as crude prices jumped over 6% after Shanghai relaxed some COVID-19 restrictions and OPEC warned it would be impossible to replace potential supply losses from Russia.
CrowdStrike Holdings Inc jumped 4.8% after Goldman Sachs upgraded the cybersecurity company's shares to "buy", citing elevated demand.
Advancing issues outnumbered decliners by a 3.91-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 2.36-to-1 ratio on the Nasdaq.
The S&P index recorded 23 new 52-week highs and one new low, while the Nasdaq recorded 44 new highs and 101 new lows.
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