US stocks closed higher Tuesday as investors celebrated lighter-than-expected inflation data the day before a key Federal Reserve policy decision.
Stocks surged after inflation came in at its lowest level since December of last year. Prices in November rose 7.1% annually, according to the Bureau of Labor Statistics' closely watched Consumer Price Index. That’s down from 7.7% in October and below economists’ expectations of 7.3%. On a month-to-month basis, prices rose by 0.1% last month, as compared to October's reading of 0.4%.
The news comes ahead of the Federal Reserve’s highly anticipated rate hike decision at the conclusion of its two-day policy meeting Wednesday. The report will be a key consideration as central bank officials continue their fight against persistently high inflation.
Traders are pricing in a half-point rate increase, down slightly from the last four three-quarter point hikes. It would be the seventh rate hike in 2022.
The Dow closed up 104 points, or 0.3%, on Tuesday.
The S&P 500 grew 0.7%.
The Nasdaq Composite was 1% higher.