The New York Stock Exchange traded slightly higher on Tuesday, as investors reacted little to the announcement of a stronger-than-expected rise in producer prices, which could fuel speculation of a postponement of Fed rate cuts.

In late morning trading, the Dow Jones index gained 0.1% to 39,470.8 points, while the Nasdaq Composite advanced 0.4% to 16,456.4 points. With a gain of 0.2% to 5,229.9 points, the S&P 500 is back to within 30 points of its all-time record.

The better-than-expected rise in the Producer Price Index (PPI) failed to impress investors on the eve of the release of consumer price figures (CPI), eagerly awaited by the market.

The Labor Department reported this morning that US producer prices (PPI) rose by 0.5% month-on-month in April, and by 2.2% year-on-year.

The 'core' index - which measures producer price pressures excluding food, energy and business services - came in at 3.1% year-on-year, returning to a one-year high.

While these better-than-expected data suggest that the Fed may yet push back the deadline for a rate cut, investors seem keen to put the disappointment into perspective.

At first glance, these figures may seem rather worrying", comments Michael Brown, strategist at Pepperstone.

"But the March figures were revised downwards to show a 0.1% drop, which explains the moderate reaction of the markets", he points out.

As a result, the yield on 10-year US Treasury bonds eased to 4.47%, after rising above 4.53% in the wake of the statistic.

Investors are also taking in the latest statements from US central bank chairman Jerome Powell, who confirmed that rates would remain high for a long time to come at a conference in Amsterdam.

Paradoxically, the market is now counting on a 49.8% probability of a rate cut in September, according to the CME FedWatch barometer, compared with 44% a month ago.

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