Inflation Report Sends Stocks Soaring as Rate Hike Fears Ease

Stocks rose across the board on Thursday after a report showed that business inflation remained broadly flat in July, fueling optimism on Wall Street that the Federal Reserve may hold off on raising interest rates this year. The producer price index was unchanged from June to July, with prices falling from 5.5% in June to 4.7% on an annual basis.

This news sent bond yields tumbling, with the 10-year Treasury yield falling as low as 4.61%. The 30-year Treasury yield, which had soared to nearly 5.3%, traded around 5.2% after the report.

Investors took this data as a sign that inflation may be easing, and therefore the Fed may not need to raise rates as aggressively as previously thought. However, Cleveland Federal Reserve President Beth Hammack reiterated her call for a rate hike, stating that 'we need to act now' to bring inflation back down to 2%.

Despite this dissenting view, the market remained optimistic, with stocks continuing to rise throughout the day. The S&P 500 jumped 0.65%, while the Nasdaq composite index ended up 0.8%. The Russell 2000, which tracks small and medium-size companies, rose 0.3%.