The Fed holds a two-day monetary policy meeting next week, with chairman Bernanke expected to hold a news conference at the end of the meeting Wednesday afternoon.
“Yesterday’s PPI and today’s CPI numbers were both more deflationary than expected—this frees up the FOMC voters who might be prone to an easing policy and it justifies what they might have to do next week,” said Stephen Guilfoyle, trader at Meridian Equity Partners.
Natural gas futures spiked to log its best day in almost two years after a government data showed a smaller-than-expected weekly inventory build. Nat gas prices have been under pressure for most of the year amid worries over a supply glut and an unusually warmer winter and spring in the U.S. Shares of Cabot Oil & Gas , EQT and Apache all rallied.
Sunoco is closing in on a dealto sell its Philadelphia refinery to Carlyle Group , sources told CNBC. The potential deal comes almost two months after Delta Airlines bought a smaller refinery in Trainer, Penn., for $180 million.
Also on the M&A front, Quest jumped after the software manufacturer said a potential bidder proposed to buy the company for about $2.15 billion, outbidding an earlier offer of nearly $2 billion by a private investment firm.
Among earnings, Kroger rallied after the supermarket chain topped earnings. But Smithfield Foods slumped after the meat processor reported weaker-than-expected results, due to lower margins in its fresh pork business and lackluster sales.
International Game Technology surged to lead the S&P 500 gainers after the slot-machine maker announced a stock repurchase program of up to $1 billion.
Nokia plummeted after the Finnish cellphone maker said it plans to cut another 10,000 jobs globally and also warned that the second-quarterly loss would be larger than expected. In addition, Baird downgraded Nokia to "underperform" from "neutral."
On the economic front, weekly jobless claims unexpectedly rose 6,000to a seasonally adjusted 386,000 last week, according to the Labor Department, in an ongoing sign of weakness in the employment market.
Meanwhile, consumer prices dipped 0.3 percent in May, falling the most in over three years, according to the Labor Department. And the current account deficit widened more than expected to $137.3 billion in the first quarter, the largest gap since the end of 2008.
The government auctioned $13 billion in 30-year bonds at a high yield of 2.720 percent and bid-to-cover of 2.40.
—By CNBC’s JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
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FRIDAY: Empire state mfg survey, treasury int'l capital, industrial production, consumer sentiment, credit card default rates reported, quadruple witching
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