U.S. stocks were sharply higher on Thursday, with the Dow up 400 points, after the July report on consumer prices showed inflation remained relatively subdued last month, helping to cement expectations that the Federal Reserve has finished raising rates of interest.

What’s happening

• The Dow Jones Industrial Average
  DJIA
  gained 419 points, or 1.2%, to 35,556.

• The S&P 500
  SPX
  gained 57 points, or 1.3%, to 4,525.

• The Nasdaq Composite
  COMP
  rose by 220 points, or 1.6%, to 13,943.

The S&P 500 has declined six of the last seven sessions as stocks have seen a rocky begin to August, but all three major indexes have erased their losses for the week to this point as of 10 a.m. Eastern Time, boosting the probabilities of stocks avoiding a second-straight weekly decline, what could be the primary for the S&P 500 since May, in accordance with FactSet data.

What’s driving markets

U.S. consumer prices rose by 0.2% in July on each a headline and core basis, excluding food and energy prices, each of which were consistent with economists’ expectations, in accordance with the newest consumer-price index report from the Department of Labor.

Nonetheless, on a year-over-year basis, headline prices rose by 3.2%, which was lower than 3.3% forecast by economists polled by The Wall Street Journal, but higher than the three% reading from the prior month. That marked the primary re-acceleration in 13 months. Meanwhile, a rise in core inflation, excluding food and energy prices, over the past yr slowed a tick to 4.7% from 4.8%, the bottom rate in almost two years.

Analysts scrutinizing the small print of the report generally determined that it could boost the Fed’s case for leaving rates of interest on hold in September.

Economists noted declines in each used and recent automotive prices in July, while dismissing a 7.7% year-over-year increase in shelter prices, reasoning that slower growth in rents in July would help ameliorate price pressures in an area that’s being closely watched by the Fed.

Based on how individual categories are weighted in the general CPI data, the price of rent and housing accounted for greater than 90% of the rise in consumer prices last month.

“Overall, the underlying details of the July CPI inflation data are consistent with ongoing progress on disinflation,” said Gurpreet Gill, global fixed income macro strategist at Goldman Sachs Asset Management, in emailed commentary.

“Although core services inflation trended higher on the month, other component-level trend are evolving consistent with our expectations. Specifically, rents and used automotive prices softened, alongside clothing and airfares.”

Traders now see lower than 14% probability of a September rate rise by the Fed, which was little-changed after the CPI data but down from greater than 20% per week ago, in accordance with the CME’s FedWatch tool.

One analysts said the information could help to reverse a few of stocks’ August slump.

“Today’s inflation report is nice news for a market that’s seen profit taking and worries about summer volatility,” said David Russell, vice chairman of market intelligence at TradeStation.

In other economic news, the newest reading on unemployment claims showed the variety of Americans applying for unemployment advantages increased last week by 21,000 to 248,000.

Treasury yields, which have been in focus for stocks recently, were little-changed on the day in recent trade as an initial kneejerk decline after the discharge of the CPI data faded.

The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was marginally lower at 4.002% after falling as little as 3.95% shortly after the inflation data were released at 8:30 a.m. Eastern Time.

The U.S. dollar also weakened, with the ICE U.S. Dollar Index
DXY
off 0.2% at 102.28.

Corporations in focus

• Walt Disney Co. shares
  DIS,
  +3.33%
  rose after the media giant reported a mixed third-quarter and said it’s going to raise prices on just about all of its streaming packages in an aggressive push to spice up profit.

• Capri Holdings shares
  CPRI,
  +56.31%
  jumped after Tapestry
  TPR,
  -13.12%,
  the owner of Coach, announced a deal to purchase the corporate, the parent company of Michael Kors, Jimmy Choo and Versace. 

• Plug Power Inc. stock
  PLUG,
  -13.72%
  dropped after the alternative-energy company saw losses for the second quarter increase greater than Wall Street expected.

• Alibaba Group Holding Ltd.
  BABA,
  +4.99%
  rose after the Chinese e-commerce giant topped expectations with its latest revenue and earnings.

• Roblox Corp.
  RBLX,
  +2.58%
  shares rose modestly, paring a few of a post-earnings decline.