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Wall Street’s main indexes rose more than 1% on Wednesday after data showing a slower-than-expected rise in inflation in July prompted traders to cut their bets on a third straight 75-basis-point interest rate hike in September.

U.S. consumer prices did not rise in July compared with June, marking the slowest monthly inflation in more than two years, as fuel prices dropped.

The market is now pricing in a 37.5% chance of a 75-basis-point increase in fund rates at the U.S. Federal Reserve’s next meeting in September, compared with 67.5% before the data.

All the 11 major S&P 500 sectors advanced in early trading, with consumer discretionary, information technology and communication services gaining between 1.7% and 2.6%.

“The sign of slowing in the rate of inflation offers hope the Fed’s rate increases won’t need to go as far as previously thought,” said Mike Owens, global sales trader at Saxo Markets.

At 9:46 a.m. ET, the Dow Jones Industrial Average was up 513.98 points, or 1.57%, at 33,288.39, the S&P 500 was up 73.23 points, or 1.78%, at 4,195.70, and the Nasdaq Composite was up 282.51 points, or 2.26%, at 12,776.44.

After a rough start to the year, the benchmark S&P 500 is up nearly 15% from its mid-June low, largely on expectations the Fed will be less hawkish than anticipated in its efforts to provide a soft landing for the economy.

Fed now seen delivering 50bp hike in Sept after inflation eases

High-growth and megacap technology stocks, whose valuations are vulnerable to rising bond yields, gained as Treasury yields fell sharply across the board. Apple Inc, Alphabet Inc and Amazon.com Inc rose more than 2% each.

“Rising real yields, due to the Fed’s commitment to fighting inflation, have been an enormous problem for valuations in 2022, so any dovishness is seen as positive by the stock market, particularly for the highest valued companies,” said Oliver Blackbourn, multi-asset portfolio manager at Janus Henderson Investors.

Electric-vehicle maker Tesla Inc gained 3.4% after Chief Executive Elon Musk sold $6.9 billion worth of company shares.

Musk said the funds could be used to finance a potential Twitter deal if he loses a legal battle. Twitter shares rose 3.3%.

Meta Platforms Inc added 5.7% after the Facebook-parent said on Tuesday that it had raised $10 billion in its first-ever bond offering.

Economy-sensitive banks also advanced, with Goldman Sachs Group Inc and JPMorgan Chase & Co climbing 3% each.

Advancing issues outnumbered decliners for a 8.16-to-1 ratio on the NYSE and a 4.14-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and 29 new lows, while the Nasdaq recorded 38 new highs and 24 new lows.

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