Stocks experienced a positive surge on Wednesday morning following the release of the May Consumer Price Index report. The Dow climbed 334 points, marking a 0.9% increase, while the S&P 500 and Nasdaq Composite also saw gains of 0.8% and 0.9%, respectively.
The report indicated that consumer prices rose by 3.3% compared to the previous year, showing a slight slowdown from April's 3.4% rate. Additionally, on a monthly basis, prices remained unchanged, a deceleration from April's 0.3% increase. These figures were below the consensus estimates of economists, as reported by FactSet.
Later in the day, the Federal Reserve was scheduled to announce its latest interest rate decision, widely anticipated to be a pause. Alongside this decision, the central bank was set to unveil its updated projections regarding potential rate cuts for the year, or any other adjustments to interest rates.
Initial forecasts suggested three quarter-point rate cuts, but some investors speculated that due to a robust labor market and earlier signs of persistent inflation, the Fed might revise this projection to just one or two cuts in 2024.
Market participants were keen to hear insights from Fed Chair Jerome Powell, as his guidance could provide valuable clarity on the central bank's future monetary policy direction.
