Stocks were higher on Tuesday after inflation data showed prices rose less than expected in May, likely clinching a pause in the Federal Reserve's rate hiking campaign on Wednesday.

At the close Tuesday, the S&P 500 (^GSPC) was up about 0.7%, while the Dow Jones Industrial Average (^DJI) climbed 0.4%, or about 145 points. The Nasdaq Composite (^IXIC) paced gains, rising 0.8%.

The Consumer Price Index (CPI) report for May showed headline inflation rose 4% over the prior year in May, the slowest since April 2021 and below expectations for a 4.1% increase.

Economists largely saw Tuesday inflation numbers as in line with what the Fed had been expecting and keeps the central bank likely to pause interest rates on Wednesday. Markets are now pricing in a 95% chance the Federal Reserve maintains its benchmark interest, per the CME FedWatch Tool.

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