Stock futures ticked higher as the annual inflation rate cracked 3%, encouraging investors who have been buying up shares following a pullback to start August.
Futures tied to the broad market index inched up 0.13%. Dow Jones Industrial Average added 13 points, while Nasdaq 100 futures ticked up 0.13%.
Consumer prices increased 2.9% year-over-year, down from 3% in June and the lowest reading since 2021, the Bureau of Labor Statistics said on Wednesday. Month-over-month, prices ticked up 0.2%. Economists polled by Dow Jones expected a 0.2% increase from the prior month and a 3% gain year-over-year.
So-called core inflation, which strips out food and energy from the headline number, advanced 0.2% on the month, also in line with expectations.
The report comes a day after lighter-than-expected wholesale inflation figures gave stocks a boost. The Dow rose more than 400 points, or about 1%. The S&P 500 climbed 1.7%, while the Nasdaq Composite gained 2.4%.
Investors had been looking toward the CPI reading to get a full-plated picture of the state of the economy, and to further solidify the prospect of an interest rate cut at the central bank's September meeting.
"It may not have been as cool as yesterday's PPI, but today's as-expected CPI likely won't rock the boat," said Chris Larkin, managing director of trading and investing for E-Trade from Morgan Stanley. "Now the primary question is whether the Fed will cut rates by 25 or 50 basis points next month."
Futures market pricing is roughly split down the middle between expectations for a quarter or half-percentage point reduction at central bank meeting on Sept.17-18, and forecast a total basis point in shifts by the end of the year, per the CME FedWatch Tool.
""If most of the data over the next five weeks points to a slowing economy, the Fed may cut more aggressively," Larkin said.
All three major averages are now above their Aug. 2 closing level, which was the session before the global market sell-off on Aug. 5 that appeared to be related to an unwind of trades in Japan and concerns about economic growth.
"We think it's very possible for the stock market to continue humming along for the rest of the year and produce an additional 5% in gains," said Skyler Weinand, chief investment officer at Regan Capital. Consumer and corporate balance sheets are very strong and we can foresee some additional multiple expansion along with steady earnings and moderate growth."