NEW YORK, March 16 — US stocks rallied on Tuesday and the S&P 500 ended a 3-day skid as another drop in oil prices and a softer-than-expected reading on producer prices helped ease inflation fears among investors, with the focus turning to the Federal Reserve’s upcoming policy announcement.
US producer prices increased solidly in February as the cost of goods like gasoline surged, and further gains are in the pipeline following Russia’s invasion of Ukraine, which has made crude oil and other commodities more expensive. The market is now fully pricing in a rate hike of at least 25 basis points when the central bank makes its policy statement on Wednesday. Investors will also be closely watching the Fed’s projections for the path of rate hikes this year and in coming years to rein in inflation.
“The fact is was weaker than the expectation so therefore the idea that Jay Powell is right going 25 basis points seems to be the way the market feels today, that could change tomorrow,” said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.
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