Traders work the floor of the New York Stock Exchange.
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U.S. stock futures jumped Wednesday as traders cheered new data that showed inflation rose less than expected last month.
Futures tied to the Dow Jones Industrial Average were up 180 points, or 0.5%. S&P 500 futures popped 0.7%, and Nasdaq-100 futures climbed 0.9%.
The consumer price index rose 3% on a year-over-year in June. Economists polled by Dow Jones expected a 3% increase. Core CPI, which strips out volatile food and energy prices, also rose less than expected.
"What we're seeing in this number is that this is a game that requires patience. ... But we're seeing it coming down," said Betsy Stevenson, professor of economics and public policy at the University of Michigan.
Stevenson added that the Federal Reserve will have to give the economy some time for its rate hikes to continue to work through the system.
"That's why we see the number we're seeing today. ...We see a job a labor market that is slowing — not crashing, but slowing — [and] we see inflation that is slowing. This is exactly what a soft landing looks like," Stevenson added.
June data for the producer price index — another well-watched gauge of inflation — is due Thursday before the bell.
Both price indexes are being watched for tea leaves on the path of inflation, which investors see as potential harbingers for how the Federal Reserve will move interest rates going forward. The market is pricing in an approximately 92% chance the Fed raises interest rates at the July meeting, according to CME's FedWatch Tool.
Stocks finished higher in Tuesday's session. The Dow finished more than 300 points higher, equating to a gain of about 0.9%, while the S&P 500 and Nasdaq Composite advanced nearly 0.7% and 0.6%, respectively.
Elsewhere, investors will monitor comments from central bank officials including Richmond Fed President Tom Barkin, Minneapolis Fed President Neel Kashkari, Atlanta Fed President Raphael Bostic and Cleveland Fed President Loretta Mester throughout Wednesday for any insights into the state of U.S. economic policy.
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