US Equities Surge on Softer Inflation Data, Boosting Rate Hike Odds

US equities closed higher on August 13 after the Bureau of Labor Statistics reported softer-than-expected Producer Price Index data for July. The S&P 500 rose around 0.5% to 0.7%, touching an intraday record near 7,817, while the Nasdaq Composite outperformed with gains of approximately 0.8% to 1.0%. Technology and communication services led the charge.

The July PPI reading was flat month-over-month and up 4.7% year-over-year, coming in lower than economists' predicted 4.9% annual increase. This followed a similar story from the Consumer Price Index data released just a day earlier, which showed a 3.4% yearly increase.

The data has led to increased bets that the Federal Reserve will sit on its hands at the September 15-16 FOMC meeting. The CME FedWatch Tool reflected this shift, with more investors expecting no rate change following the data release.