Treasury Yields Ease as Lower-Inflation Report Supports Stocks

US Treasury yields eased on Wednesday after a report showed inflation wasn't as bad as expected in August, helping stabilize US stock indexes. The S&P 500 rose 0.5%, with the Dow Jones Industrial Average up 81 points and the Nasdaq composite 0.9% higher.

The better-than-expected data led to a decrease in Treasury yields, with the 10-year yield dropping to 5.25% from 5.26% on Tuesday. Shorter-term yields also declined, as traders pared bets that the Federal Reserve would raise interest rates next month to combat inflation.

While inflation remains high at 3.4%, it was lower than economists' forecast of 3.7%. The report is preferred by the Fed and followed other data showing strong US economic growth in the spring. Business activity in the Midwest also grew better than expected.