3M shares jump after new CEO named; Wall Street rallies to a record

U.S. stocks rallied to records Tuesday, led again by technology companies, as some of Wall Street’s most influential got back in their groove.

The S&P 500 jumped 1.1 percent to top its all-time high set last week. The Dow Jones Industrial Average climbed 235 points, or 0.6 percent, and the Nasdaq composite jumped 1.5 percent.

All three indexes began the day with losses after a highly anticipated report on inflation said U.S. consumers paid prices that were a bit higher last month than economists expected. The worse-than-expected data kept the door closed on hopes that the Federal Reserve could deliver long-sought cuts to interest rates at its meeting next week.

But the inflation figures were still close to expectations, and traders held onto hopes that the longer-term trend downward means the Fed will begin the hoped-for cuts in June. That helped stock indexes to reverse their losses as the day progressed.

Plus, inflation may not be as hot in reality as the morning’s report suggested.

“January and February are notoriously noisy months for a lot of economic data,” said Brian Jacobsen, chief economist at Annex Wealth Management.

“The Fed wasn’t planning on cutting rates next week, and this report doesn’t change that. The discussion around the table will be more about the longer-term trend.”

The fear is “sticky” inflation that refuses to go down will force the Fed to keep interest rates high, which grinds down on the economy and investment prices. The Fed's main interest rate is already at its highest level since 2001.

“Another hotter-than-expected CPI reading may breathe new life into the sticky inflation narrative, but whether it actually delays rate cuts is a different story,” said Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.

For months, traders on Wall Street have been trying to get ahead of the Federal Reserve and guess when cuts to rates will arrive. They have already sent stock prices higher and bond yields lower in anticipation of it.

Through it all, the Fed has remained “nothing if not consistent in doing what it said it would do,” Larkin said. “Until they say otherwise, their plan is to cut rates in the second half of the year.”

The immediate reaction across financial markets to the inflation data was nevertheless halting and uncertain.

In the bond market, Treasury yields initially dropped and then swung higher. The yield on the 10-year Treasury eventually rose to 4.15 percent from 4.10 percent late Monday.

The price of gold, which has shot to records on expectations for coming rate cuts, also swung. An ounce for delivery in April ended up falling $22.50 to settle at $2,166.10. A measure of nervousness among U.S. stock investors, meanwhile, eased more than 8 percent after squiggling up and down a few times.

On Wall Street, big technology stocks did much of the market's heaviest lifting. Oracle jumped 11.7 percent after reporting stronger profit for the latest quarter than analysts expected.

Nvidia also rallied 7.2 percent to bounce back from a rare two-day stumble. A frenzy on Wall Street around artificial-intelligence technology has caused its stock to swell in size, making it one of the most influential on the market. It was the single strongest force pushing the S&P 500 upward on Tuesday.

New York Community Bancorp rose 5.8 percent after it said it closed its previously announced deal to raise roughly $1.05 billion in cash from the sale of stock. The bank has been struggling under the weight of falling prices for commercial real estate and the growing pains associated with prior acquisitions it made. Its troubles have also led to worries about the broader regional banking industry.

3M climbed 5 percent after it said Bill Brown, the former chairman and CEO of L3Harris Technologies, will take over as its CEO at the start of May.

On the losing end of Wall Street was Southwest Airlines. It dropped 14.9 percent after cutting its forecast for an important measure of revenue in the first three months of this year, partially because of lower-than-expected flying by some leisure travelers.

It also said Boeing told the company that it will deliver fewer airplanes than expected this year. Shares of Boeing, which is facing criticism over its safety and manufacturing quality, sank 4.3 percent.

All told, the S&P rose 57.33 points to 5,175.27. The Dow climbed 235.83 to 39,005.49, and the Nasdaq gained 246.36 to 16,256.64.

In stock markets abroad, Japan’s Nikkei 225 slipped 0.1 percent to retreat further from its recent records. Expectations are building that its central bank will raise interest rates, which are below zero.

Indexes jumped 3.1 percent in Hong Kong, 1.2 percent in Frankfurt and 1 percent in London but moved more modestly elsewhere across Asia and Europe.

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