NEW YORK—Stocks on Wall Street finished higher Tuesday after a report showed inflation cooled more than expected last month, cementing expectations that the Federal Reserve is about to dial down the size of its interest rate hikes.
The encouraging inflation data raised hopes for easing pressure on the economy ahead of an interest rate policy update on Wednesday from the Fed. Stocks initially surged, driving the Dow Jones Industrial Average more than 700 points higher, but then pared their gains as analysts cautioned investors not to get carried away by hopes for an easier Fed, as they have in the past….