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Indexes up: Dow 0.37%, S&P 500 0.32%, Nasdaq 0.32%

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US core inflation jumps by 3.1% in July

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Intel ( INTC ) climbs after CEO meets Trump

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Cardinal Health ( CAH ) falls on plans to buy Solaris for $1.9 bln

(Updates for market open)

By Johann M Cherian and Sanchayaita Roy

Aug 12 (Reuters) -

Wall Street's main indexes inched higher on Tuesday after

data showed inflation rose broadly in line with expectations in

July, putting the Federal Reserve on track to lower interest

rates next month.

A Labor Department report showed that the Consumer Price

Index (CPI) rose by an expected 0.2% on a monthly basis in July,

while on an annual basis it was a touch lower than what

economists were projecting, drawing calls from President Donald

Trump to lower interest rates.

However limiting the optimism, the data suggested that

underlying inflation rose by 3.1% in the previous month as

markets look for signs that tariffs and trade uncertainty were

filtering into prices.

Yields on shorter-dated Treasury bonds - a

reflection of interest rate expectations - moved lower after the

data and interest rate futures showed traders are giving an

88.8% chance that the Fed could lower interest rates by about 25

basis points in September.

"My bigger fear is that this is still early innings of

this process and just as the Fed will be beginning to cut rates

in the autumn, that's when the inflation data will probably

start to be registering some of these more direct tariff price

increases and it's going to complicate the rate-cutting

decision," John Velis, a macro strategist at BNY said.

The data also comes at a time when there are growing

concerns over the quality of economic data, weeks after Trump

fired the head of the Bureau of Labor Statistics following

downward revisions to previous months' nonfarm payrolls counts.

At 09:49 a.m. ET, the Dow Jones Industrial Average

rose 163.16 points, or 0.37%, to 44,139.85, the S&P 500

gained 20.65 points, or 0.32%, to 6,394.10 and the Nasdaq

Composite gained 69.38 points, or 0.32%, to 21,454.78.

Eight of the 11 S&P 500 sectors were in gains, with energy

in the lead with a 0.8% rise.

Further providing some relief, U.S. and China extended

their tariff truce until November 10, staving off triple-digit

duties on each other's goods.

U.S. stocks have rallied in recent weeks and the tech-heavy

Nasdaq touched a record high on Tuesday, boosted by

better-than-expected earnings from technology majors, a detente

between the U.S. and its top trade partners and on expectations

of rate cuts.

Reflecting the confidence, data from BofA Global Research

showed that inflows into U.S. stocks last week were the largest

in two years.

Markets are monitoring developments around Trump's nominee

E.J. Antoni to the Bureau of Labor Statistics commissioner post

and potential candidates for the Fed's top job.

Among single stocks, Intel ( INTC ) rose 1.7% as Trump

praised CEO Lip-Bu Tan following their meeting on Monday, days

after seeking Tan's resignation.

Palo Alto Networks ( PANW ) gained 2% after brokerage Piper

Sandler raised its rating on the cybersecurity stock to

"overweight" from "neutral".

U.S.-listed shares of On Holding climbed 11.6%

after the sportswear maker raised its annual sales forecast.

Cardinal Health ( CAH ) dropped 9% after the drug

distributor said it will buy healthcare management firm Solaris

for $1.9 billion.

Advancing issues outnumbered decliners by a 2.44-to-1 ratio

on the NYSE and by a 1.78-to-1 ratio on the Nasdaq.

The S&P 500 posted 14 new 52-week highs and eight new

lows, while the Nasdaq Composite recorded 43 new highs and 44

new lows.