Stocks rise after data shows inflation slowed last month

Stocks gained on Wednesday, the final day of September, after new U.S. economic data showed inflation slowed last month, sending Treasury yields lower.

The Dow Jones Industrial Average climbed 84 points, or nearly 0.2%. The S&P 500 advanced 0.6%, and the Nasdaq Composite advanced roughly 1%.

The personal consumption expenditures price index for August increased at a 3.4% annual rate, down from 3.7% the month prior. Economists surveyed by Dow Jones had been looking for inflation to remain steady at 3.7%. Even more encouraging was core PCE, excluding food and energy, which rose 3% year on year, down from 3.3% the month before and also lower than economists had forecast.

The bond market seemed unshaken following the readout. The 10-year Treasury yield rose about 1 basis point to 5.27%, hovering within striking distance of the nearly two-decade high hit earlier this week. The 30-year Treasury yield was last up 3 basis points to 5.622%.

The market turned its eyes to the jobs reports, which is slated to come out on Friday. Non-farm payrolls are expected to have risen by 84,000 in September. That’s about half of those added in August on a seasonally adjusted basis.

Odds of a Fed rate hike eased on Wednesday. The CME Group’s FedWatch tool shows traders are pricing in a 35% chance of a quarter-point rate hike next month. That’s down 51% a day ago. Traders are still expecting another hike in December despite the light inflation data Wednesday.