New York, Aug 12 (AP) The US stock market is climbing toward records on Tuesday after data suggested inflation across the country was a touch better last month than economists expected.

The S&P 500 rose 0.6 per cent and was on track to top its all-time high set two weeks ago. The Dow Jones Industrial Average was up 251 points, or 0.6 per cent, as of 9:35 am. Eastern time, while the Nasdaq composite was 0.7 per cent higher and also heading toward a record.

Stocks got a lift from hopes that the better-than-expected inflation report will give the Federal Reserve more leeway to cut interest rates at its next meeting in September.

Lower rates would give a boost to investment prices and to the economy by making it cheaper for US households and businesses to borrow to buy houses, cars or equipment. President Donald Trump has angrily been calling for cuts to help the economy, often insulting the Fed's chair personally while doing so.

But the Fed has been hesitant because of the possibility that Trump's tariffs could make inflation much worse. Lowering rates would give inflation more fuel, potentially adding oxygen to a growing fire. That's why Fed officials have said they wanted to see more data come in about inflation before moving.

Tuesday's report showed US consumers paid prices for groceries, gasoline and other costs of living that were 2.7 per cent higher in July than a year earlier. That's the same inflation rate as June's, but it was below the 2.8 per cent that economists expected.

The report pushed traders on Wall Street to bet on a 94 per cent chance that the Fed will cut interest rates for the first time this year in September. That's up from nearly 86 per cent a day earlier, according to data from CME Group.

The Fed will receive one more report on inflation, as well as one more on the US job market, before its next meeting, which ends Sept 17. The most recent jobs report was a stunner, coming in much weaker than economists expected.

Some economists warn that more twists and turns in upcoming data could make the Fed's upcoming decisions not so easy.

Even Tuesday's better-than-expected inflation report had some discouraging undertones. An underlying measure of inflation, which economists say does a better job of predicting where inflation may be heading, hit its highest point since early this year, noted Gary Schlossberg, market strategist at Wells Fargo Investment Institute.

“Eventually, tariffs can show up in varying degrees in consumer prices, but these one-off price increases don't happen all at once,” said Brian Jacobsen, chief economist at Annex Wealth Management. “That will confound the Fed and economic commentators for months to come.” Other central banks around the world have been lowering interest rates, and Australia's on Tuesday cut for the third time this year.

On Wall Street, Intel's stock rose 1.5 per cent after Trump said its CEO has an “amazing story,” less than a week after he had demanded Lip-Bu Tan's resignation.

Cardinal Health dropped 12.4 per cent even though the company reported a stronger profit for the latest quarter than analysts expected. Its revenue fell short of forecasts. Analysts said the market's expectations were particularly high for the company after its stock had already soared 33.3 per cent for the year coming into the day.

Critics say the broad US stock market is looking expensive after its surge from a bottom in April. That's putting pressure on companies to deliver continued growth in profit.

In stock markets abroad, indexes edged up in China after Trump signed an executive order late Monday that delayed hefty tariffs on the world's second-largest economy by 90 days. The move was widely expected, and the hope is that it will clear the way for a possible deal to avert a dangerous trade war between the United States and China.

Japan's Nikkei 225 jumped 2.1 per cent, and South Korea's Kospi fell 0.5% for two of the world's bigger moves.

In the bond market, the yield on the 10-year Treasury rose to 4.29 per cent from 4.27 per cent late Monday.

The yield on the two-year Treasury, which more closely tracks expectations for the Fed, edged down to to 3.75 per cent from 3.76 per cent. (AP) RD RD