Yahoo TV

STORY: U.S. stocks closed up on Tuesday, as cooling inflation data boosted hopes that the Federal Reserve would not raise interest rates at the end of its two-day policy meeting this week.

The Dow gained four-tenths of a percent, the S&P 500 gained seven-tenths and the Nasdaq gained eight-tenths of a percent – the latter two indexes reaching their highest closing levels in 14 months.

A U.S. Labor Department report showed the Consumer Price Index, or CPI, rose just 0.1% in May, putting the annual inflation rate at 4%, lower than most economists had expected.

Traders have now priced in a 93% chance that the central bank will pause its rate hikes at the conclusion of its two-day policy meeting on Wednesday… with some still believing it will cut rates by the end of the year.

But Nancy Daoud, private wealth advisor for Ameriprise Financial, believes a Fed pivot any time soon is not likely as the central bank tries to achieve its 2% inflation goal.

“So going from 4 to 2% is I think going to be a much tougher road than it was going from 9.1 to 4. [FLASH] Although I believe there will be a pause tomorrow or this week, there very likely will be another rate hike, maybe later in the summer or early fall. [FLASH] I think the Fed is trying very hard to have that soft landing that everybody's wishing for, but it might be a lot tougher to do. We may be looking at the hard landing and perhaps that recession that we've all been talking about.”

In individual movers, U.S.-listed shares of Chinese companies rose after China's central bank lowered its short-term lending rate for the first time in 10 months. Alibaba Group gained nearly 2% and JD.com jumped 3.5%.

Intel gained 2.5% after a report the company is in talks with SoftBank Group’s chip designer, Arm, to be an anchor investor in its initial public offering.

And the most traded stock in the S&P 500 was Tesla, with $40.8 billion worth of shares exchanged during the session. Shares of the EV-maker rose more than 3.5%.