Investing.com-- The Nasdaq closed at a record high Tuesday, shrugging off a hotter-than-expected inflation report as Federal Reserve chairman Jerome Powell said the current level of interest rates is working to curb inflation.
At 16:00 ET (20:00 GMT), the NASDAQ Composite closed 0.8% higher at a fresh record high of 16,511.18. The Dow Jones Industrial Average climbed 126 points, or 0.3%, and the S&P 500 rose 0.4%.
PPI surprises on the upside; CPI up next
U.S. producer prices grew by a faster-than-anticipated rate of 0.5% on a monthly basis in April, due mainly to elevated costs for services and goods, in a sign of lingering inflationary pressures early in the second quarter.
It was a quicker pace than an increase of 0.3% economists had predicted and up from a downwardly revised month-on-month contraction of 0.1% in March.
In the twelve months through April, the producer price index for final demand moved up by 2.2% as expected -- the largest uptick since a jump of 2.3% in April 2023. An updated mark for the previous month was also revised lower to 1.8%.
The PPI data is "still above the threshold we see as convincing evidence that inflation is moving in the right direction," Morgan Stanley said in a note.
The more closely watched consumer price index is due on Wednesday, and these readings come after inflation remained largely sticky through the first quarter, dashing expectations of early interest rate cuts this year.
A string of Federal Reserve officials have warned in recent weeks that the central bank was in no hurry to begin cutting rates, and needed more confidence that inflation was moving back towards its 2% annual target.
Fed chairman Powell backs current level of rates
In the wake of growing concerns about inflation, Fed chairman Jerome Powell continued to downplay the need too push rates higher, saying the current level of rates were restrictive and working to curb inflation.
“I don’t think it’s likely that the next move will be a rate hike,” Powell said at the Foreign Bankers Association meeting in Amsterdam on Tuesday.
“It’s more likely we’ll be holding the policy rate where it is” to curb inflation,, Powell added.
GameStop continues rally as meme stock fever makes appearance
Videogame retailer GameStop (NYSE:GME) rose 60%, adding to its rally from a day earlier as meme stock fever regains momentum, with fellow meme stocks AMC Entertainment Holdings Inc (NYSE:AMC), BlackBerry Ltd (NYSE:BB), and Tupperware Brands Corporation (NYSE:TUP), and also in the ascendency.
Fueling the jump was the first post on X.com in three years from "Roaring Kitty", an account linked to a financial markets commentator and social media influencer Keith Gill.
The "Roaring Kitty" account posted a series of well-known internet memes, including an image of a man leaning forward in a chair that is used to signify the growing seriousness of a situation. "Roaring Kitty" also posted a collection of other memes, although none of them mentioned GameStop or other stocks.
Kraft Heinz, Alibaba , Apple in focus
Kraft Heinz (NASDAQ:KHC) stock fell nearly 1% after the Wall Street Journal reported the food giant is exploring a sale of its Oscar Mayer meats business that could fetch anything between $3 billion to $5 billion,
Apple (NASDAQ:AAPL) is gearing up to sell its Vision Pro mixed-reality headset outside the United States, Bloomberg reported, sending the stock up 0.6%.
Alibaba Group Holdings Ltd ADR (NYSE:BABA), however, fell 6% after the Chinese e-commerce giant's a 86% slump in fiscal Q4 from a a year ago overshadowed revenue that topped Wall Street estimates.