US Stocks Surge on Soft Inflation Data, Rate Hike Chances Fall

US stocks rallied on Wednesday as inflation data came in softer than expected. The S&P 500 and Nasdaq 100 futures rose by 0.4%, while Dow futures gained 100 points.

The Personal Consumption Expenditures (PCE) price index increased by 0.3% in August, below forecasts of 0.4%. Core PCE also grew at a slower pace than anticipated, rising by 0.2% against expectations of 0.3%.

Headline PCE inflation stood at 3.4% year-over-year, which is lower than the predicted 3.7%.

Markets now price in a below 40% chance of another rate hike by the Federal Reserve as soon as next month.