Stocks rise after inflation report, S&P 500 and Nasdaq hit fresh 13-month highs: Live updates

Stocks closed higher on Tuesday after traders spent the session adding to optimism that the latest inflation data could support the central bank skipping a rate hike for June.

The Dow Jones Industrial Average added 146 points , or 0.4%, to close at 34,212.12. The S&P 500 gained 0.7% to close at 4,369.01, and the Nasdaq Composite advanced 0.8% to 13,573.32.

The consumer price index showed inflation increased 0.1% in May, down from 0.4% a month earlier, and gained 4% year over year. The Fed will decide its next move on policy Wednesday.

— Brian Evans

It may be hard to find more room to rally for Nvidia, said Aswath Damodaran, a New York University business professor also known as the "dean of valuation."

The stock has surged more than 180% this year amid excitement around artificial intelligence. But he said it's hard to see room for shares to get more expensive after trading around $400.

"I've held Nvidia now for five years and I'm happy that I did," Damodaran said on CNBC's "Closing Bell." But at the current price, "Nvidia would basically have to decimate or dominate the entire AI market for it to be justifying this price. And I'm not willing to take that bet. I mean, there's too little upside left when you price that in."

— Alex Harring

Shares of Oracle turned negative in afternoon trading, giving back all of the gains that followed a Monday evening earnings report that beat estimates on the top and bottom lines.

The stock opened trading on Tuesday up nearly 6% and set a new all-time high during the session.

— Jesse Pound

Christopher Ailman, California State Teachers Retirement System's chief investment officer believes the hype in artificial intelligence could be overblown.

"I think Wall Street has overhyped AI but we'll see where it goes," Ailman said on CNBC's "Power Lunch."

Ailman also said this year's market rally is too concentrated on just a few megacap tech names, which could be a sign that it might not sustain.

"I am very concerned at how narrow this market is," Ailman said. "We are cautious in here and I'm worried that tech is, especially the Big Tech, is getting ahead of itself."

— Yun Li

The S&P 500 reached a new 13-month high this week, but the rally may not last, according to Wolfe Research.

"We continue to believe this year's rip higher has been a classic bear market rally, inflation is going to remain 'sticky', the Fed will be 'higher for longer' and a recession will hit later this year," the firm's Chris Senyek wrote Tuesday.

— Sarah Min

Wall Street remained bullish on Salesforce coming off its investor day, with analysts heralding the focus on artificial intelligence.

Barclays, Goldman Sachs and Bank of America were all among firm's reiterating their buy-equivalent ratings.

"While there was not much in the way of major share price-driving announcements, we believe the event went a long way in cementing CRM's position for AI at the Enterprise level," said Barclays analyst Raimo Lenschow. "We continue to like the story."

But not everyone on the Street was as optimistic. Citi maintained its neutral rating, with analyst Tyler Radke noting the company showed a good vision for the role of AI but some questions were unanswered.

— Alex Harring

The rally for tech and growth stocks is likely reaching the end of the road, according to BTIG technical strategist Jonathan Krinsky.

"We are sticking with our call that the pattern this year is largely inverse to last year, and the mid-June low we saw in 2022 around the FOMC meeting will be mirrored by a mid-June peak this year," Krinsky wrote in a note to clients. "While we feel a bit like a broken record, today's gap-up on the NDX has all the hallmarks of a parabolic blow-off top, as the boat is getting very one-sided."

To back up his point, Krinsky pointed out that Nasdaq futures are 22% above their 200-day moving average and that the CBOE 5-day put/call ratio is at its lowest level since August.

— Jesse Pound

Tuesday's consumer price index data showing the annual inflation rate cooled to its lowest level in more than two years is proof that inflation has been "defeated," according to David Bahnsen, chief investment officer of Bahnsen Group.

The data" suggests that inflation has been defeated," he said. "Most of the inflation we are seeing is coming from housing, but it takes time for home price declines to show up in the CPI data, so today's 4% inflation rate is actually much closer to the 2% Federal Reserve target."

Bahnsen said the bond market agrees with the narrative that inflation has been defeated and expected the Federal Reserve to announce a pause on interest rate hikes on Wednesday.

— Alex Harring

Atlantic Equities downgraded shares of PayPal to a neutral rating as the payments company grapples with competitive pressures.

"There look to be no quick fixes to PayPal's branded market share or transaction margins, making it tough to see what actions will reignite investor interest in the stock near-term, even from new leadership, so we move to the sidelines with a Neutral rating," wrote Kunaal Malde.

The analyst expects profitability question to linger questioning the company's profitability as business differentiation declines as a result of heightened competition within brand checkout and unbranded processing weighing on margins.

The firm reduced its year-end price target to $72 a share, reflecting 13% upside from Monday's close. Malde expects the valuation to remain rangebound.

— Samantha Subin

Check out the companies making headlines in midday trading.

Oracle— Shares rose 2.7% to an all-time high on the back of a strong earnings report for the fiscal fourth quarter. Oracle reported $1.67 in adjusted earnings per share, while analysts polled by Refinitiv expected $1.58. Revenue also came in higher than expected at $13.84 billion against a $13.74 billion estimate. Goldman Sachs upgraded Oracle to neutral from sell following the report.

Norwegian Cruise Line Holdings — Norwegian Cruise Line Holdings jumped 4.8% to the highest since May 2022 after Bank of America on Monday raised its price target to $19 from $17, though the firm maintained a neutral investment rating. Carnival's target went to $20 from $11, also rising to the highest since May, 2022, while Royal Caribbean's rose to $95 from $82 and the stock touched the highest since November, 2021.

Urban Outfitters – The retailer gained nearly 4% following an upgrade to overweight by Morgan Stanley. The Wall Street firm cited Urban Outfitters' low valuation relative to peers and improving business fundamentals.

The full list can be found here.

— Hakyung Kim

The central bank had already decided to skip a rate hike for June before Tuesday's consumer price index report, according to Santander chief US economist Stephen Stanley.

"I thought going in that the FOMC had already decided to skip in June, so today's numbers did not impact my thinking for tomorrow's rate decision," Stanley said.

Stanley says despite the headline figure slowing to a 0.1% increase in May, core prices - which exclude volatile food and energy components - still remain elevated and will push the central bank to stay the course to tighten further after June.

"I do expect another rate hike in July, and in my view another large core CPI increase in May underscores how far the Fed still has to go to get inflation under control," Stanley said. "I don't read today's report as dovish at all. It's more of the same in terms of core, which is not what the Fed wants to see."

— Brian Evans

Loop Capital is getting more bullish on Ulta Beauty, upgrading shares to a buy rating as the company pushes into the luxury market and expands its Target shopping experience.

"We believe the nascent luxury brand expansion represents a multi-year comparable sales growth driver," wrote analyst Anthony Chukumba.

Shares were last up 3.3% Tuesday.

Read more on the upgrade here.

— Samantha Subin

Devon Energy shares added 2.8% Tuesday after Goldman Sachs upgraded shares to buy from neutral, citing an improving outlook for capital expenditures and production.

"While we do not expect DVN to beat its guidance and consensus production expectations, we believe shares are trading at a discount to peers and potentially pricing in concerns around further execution missteps relative to other large-cap peers," said analyst Neil Mehta.

Read more on the upgrade here.

— Samantha Subin

WTI (JUL) gained 3.7% to reach $69.74 Tuesday, on track for its best day since May 5, when it gained 4.05%. This is also the commodity's first positive day in the last four trading sessions.

The VanEck Oil Services ETF (OIH) is also up 4%, on pace for its best day since Jun 2, when OIH gained 5.12%. OIH leaders today include NexTier, Patterson-UTI, Nabors, Transocean, which are all up more than 5% during Tuesday's trading session.

— Hakyung Kim, Gina Francolla

Investors often ignore Amazon's retail business, but Bernstein's tech trading desk says it's time to start paying attention. In an email Tuesday, Bernstein said this division will drive earnings revisions — and the stock — in the coming years because operating margins are starting to improve as product fulfillment costs ease.

These comments follow analyst Mark Shmulik's decision to make Amazon one of the firm's top picks. Shmulik had noted that the growth of paid units sold started to outpace the increase in shipping costs in the third quarter of 2022, and the gap has continued to widen ever since.

Amazon shares have gain nearly 50% since the start of the year, but trading desk sees "a lot more room for the stock to run."

—Christina Cheddar Berk

The KraneShares CSI China Internet ETF (KWEB) is up about 4% in Tuesday's session.

That puts it on pace for its best performance since June 1, when the fund finished 4.97% higher.

Baidu has led the index up with a gain of more than 7%. iQIYI and Lufax followed, with each advancing more than 6%.

All U.S. stocks in the index were up in Tuesday's session.

Despite the rally, the ETF is still down more than 4% this year.

— Alex Harring, Gina Francolla

MGM Resorts has been outperforming the broader markets, but it still looks cheap compared to its closest peers and the stock's own history, Wells Fargo analyst Daniel Politzer said in a note to clients.

"Over the past year, MGM is +35% (vs. SPX +11%), but at 6x EV/EBITDAR, its multiple has compressed the most in our Gaming coverage as the stock has not kept pace w/ improving fundamentals, upward est. revisions, and $2b+ in share repo," the note said.

"EV/EBITDAR" is a variation on the traditional price to earnings multiple. MGM has historically traded at closer to a 10 using that metric, according to Wells Fargo.

Politzer has an overweight rating and a $58 price target on MGM. The stock closed at $42.80 per share on Monday.

— Jesse Pound

A June survey of fund managers by Bank of America shows the group turning more bullish on the near-term impact of artificial intelligence.

When asked about the impact of AI adoption over the next two years, 40% said they expect higher profits, while 14% said they see an increase in both job and profits. A little less than a third of respondents expect neither.

— Samantha Subin

The major averages kicked off the session on a high note after a fresh inflation report matched expectations.

The Dow traded 68 points higher, or 0.2%. The S&P 500 climbed 0.4%, and the Nasdaq Composite advanced 0.8%.

— Fred Imbert

GameStop rose 6% in the premarket after Chairman Ryan Cohen disclosed the purchase of 443,842 shares. That's about $10.8 million worth of GameStop shares, based on Monday's closing price.

— Fred Imbert

First Horizon shares lost 2.5% after JPMorgan downgraded the regional bank stock to neutral following a non-rating period.

"With expense growth to remain elevated in 2023/2024, deposit costs continuing to rise, fee income acting as a headwind particularly if the Fed doesn't pivot, and the absence of a near-term catalyst, we move to Neutral," wrote analyst Steven Alexopoulos.

Read more on the call here.

— Samantha Subin

Morgan Stanley upgraded shares of Urban Outfitters to overweight from equal weight, citing its attractive valuation relative to peers.

"Altogether, we upgrade now as we want to be ahead of that inflection, & think the aforementioned low relative valuation & outsized EBIT margin expansion potential vs. peers presents oppty," wrote analyst Alex Straton.

Shares gained more than 3% before the bell.

Read more on the upgrade here.

— Samantha Subin

The consumer price index rose 4% year over year last month, matching a Dow Jones forecast and marking its lowest level in two years. The CPI's month-over-month change and so-called core measure — which strips out volatile food and energy prices — were also in line with expectations.

— Jeff Cox

Check out the companies making headlines before the bell:

• Oracle — Shares jumped more than 5% after Oracle announced a beat on top and bottom lines for the fiscal fourth quarter. Meanwhile, CEO Safra Catz said she expects adjusted earnings in the fiscal first-quarter of $1.12 to $1.16 per share. Analysts polled by Refinitiv had expected $1.14 in adjusted earnings.
• Urban Outfitters — Shares rose 3.4% following an upgrade to overweight from equal weight by Morgan Stanley. The firm said the retailer has a de-risked 2023 forecast and low valuation.
• Apple — Apple declined 0.7% in the premarket after UBS downgraded the stock to neutral from buy late Monday. The Wall Street firm said it sees continued pressure for iPhone demand even with support from emerging markets.

Read the full list here.

— Sarah Min

Traders at JPMorgan laid out different scenarios for how the stock market might react to to Tuesday's consumer price index report. Here are the two most-likely outcomes, according to the bank's trading desk:

• 40% chance — CPI between 4% and 4.2% on a year-over-year basis: This is the bank's trading desk's most likely scenario, noting it "will have the market inching closer to 'mission accomplished' on breaking inflation. This should also cement the Fed being paused in June with the print more integral to the July Fed meeting." The S&P 500 would pop between 0.75% and 1.25% under this scenario, JPMorgan said.
• 35% chance — CPI between 4.2% and 4.4%: JPMorgan said while a number in this range would confirm the country's disinflationary trend, "it would do little to aid the 'Fed is done' narrative." The S&P 500 would trade between breakeven and 0.5% higher under this outcome, the traders predicted.

— Fred Imbert, Michael Bloom

Europe stocks opened higher Tuesday, with the benchmark Stoxx 600 index up 0.45% at 8:30 a.m. BST.

Tech stocks moved 1.7% higher as global investors anticipate a pause in rate hikes from the U.S. Federal Reserve.

France's CAC 40 gained 0.73% as Germany's DAX rose 0.55% and the U.K.'s FTSE 100 traded 0.22% higher.

— Jenni Reid

The People's Bank of China cut its seven-day reverse repurchase rate by 10 basis points from 2% to 1.9%, injecting 2 billion Chinese yuan ($279.97 million) through its seven-day repos. A repurchase agreement (repo) is a type of short-term borrowing rate.

This is the central bank's first such move since August and follows the nation's largest banks cutting deposit rates last week, signaling that further monetary easing lies ahead.

The onshore Chinese yuan weakened 0.25% to 7.1618 against the U.S. dollar shortly after the move Tuesday and hovered at its weakest levels since November.

– Jihye Lee

Japan's Nikkei 225 topped 33,000 points for the first time since July 1990, passing a key psychological level as Japanese stocks continue their bull run.

Battery manufacturer GS Yuasa rose 5.97%, leading gains in the index, and chipmaker Renesas Electronics rose 5.88%.

SoftBank Group rose 5.59% and Toyota Motor rose by more than 5% while Mazda gained 4.12%.

– Jihye Lee

India 's consumer price index has recorded a 4.25% gain year on year in May, marking its slowest rate of inflation since January 2021.

This was lower than April's figure of 4.7% and also lower than the 4.42% expected by economists polled by Reuters.

Government data showed that prices of clothing and footwear saw the highest increase of 6.64% in May, followed by prices of housing, which increased 4.84%.

— Lim Hui Jie

Shares of Samsung Electronics and Taiwan Semiconductor Manufacturing rose on Tuesday after the Wall Street Journal reported the U.S. government plans to allow Korea and Taiwan's chipmakers to maintain their operations in China.

Undersecretary of Commerce for industry and security Alan Estevez was quoted by the WSJ as telling an industry gathering that the administration intends to extend the current exemptions for the two markets from a bill aimed at boosting its competitiveness with China.

In South Korea, Samsung Electronics gained 1.27% and SK Hynix rose 2.8%. Taiwan Semiconductor Manufacturing Company, or TSMC, wrote 3.14%.

– Jihye Lee

The Federal Trade Commission is seeking a temporary restraining order and preliminary injunction to block Microsoft's planned purchase of video gamer maker Activision Blizzard ahead of its July 18 deadline.

According to filings, the FTC raised concerns surrounding Microsoft's ability "withhold or degrade" Activision's gaming products, or prevent the content from launching on other consoles.

CNBC previously reported the FTC's plan on Monday. Shares were little changed in after-hours trading.

— Lauren Feiner, Jordan Novet and Samantha Subin

Apple shares closed at an all-time high on Monday, a week after hitting the fresh milestone on an intraday basis.

Shares added more than 1.5% on Monday to close at $183.79 a share. Its market capitalization also sits at $2.89 trillion, according to FactSet data.

Last week, the iPhone maker unveiled its Vision Pro mixed reality headset, its first new product line since 2014.

— Kif Leswing, Samantha Subin

Oracle's stock gained 3% in extended trading after surpassing Wall Street's expectations for the recent quarter.

The software company shared adjusted fiscal fourth-quarter earnings of $1.67 a share on $13.84 billion in revenue. Analysts polled by Refinitiv called for EPS of $1.58 on $13.73 billion in revenue.

Revenue at the company grew 17% year over year, with revenue form cloud infrastructure rising 76% from the year ago period. Some of its cloud services garnered approval for use by U.S. defense and intelligence agencies during the period, Oracle said.

— Jordan Novet, Samantha Subin

Tesla shares rose for a 12th straight day on Monday to notch its longest winning streak on record.

The electric vehicle stock added 2.2% during Monday's session, bringing its yearly gains to nearly 103%.

On Friday, shares rose for an 11th consecutive day following an announcement that General Motors, like Ford Motor, would utilize the company's EV charging network. January 2021 marked the last time shares rose consecutively for that many straight sessions.

— Samantha Subin

Stock futures opened flat in overnight trading Monday.

Futures tied to the S&P 500 were little changed, while Dow Jones Industrial Average futures lost 10 points. Futures connected to the Nasdaq Composite inched 0.1% higher.

— Samantha Subin