SPX: S&P 500 Gains 0.5% Led by Tech Updraft. August Inflation Data Looms.

Next big test for stocks and the last major report before Fed’s rate decision — is consumer inflation on its way to the 2% target?

• The S&P 500 index jumped 0.5% on Tuesday with investors feeling optimistic to bet on technology shares ahead of today’s big data dump. The broad-based stock average was joined in green by the tech-dense Nasdaq Composite, which added over 0.8%. The 30-stock Dow Jones Industrial Average slipped under the flatline with a 0.2% decline, dragged by a retreat in the banking sector.
• Focus now is shifting to looming inflation data — the final frontier before the Federal Reserve meets up next Wednesday to decide the fate of interest rates. The consumer price index report (CPI) is expected to show price pressures in August continued easing to a 2.6% annual clip, down from 2.9% in July. If materialized, this fresh print will strengthen investors’ conviction of a 50bps cut to interest rates.
• But that’s not too likely to unfurl into reality. Investors like to overshoot their expectations and that doesn’t necessarily mean the Fed will follow through. What markets have been … fed so far is an outlook of a casual 25bps trim to interest rates that is intended to alleviate some of the strain on the US economy, but not too much. Futures contracts on the major averages were pointing to a lower open on Wednesday.