Stocks Soar on Cooling Wholesale Inflation, Fed Pivot Bets

The major U.S. stock indexes are surging Tuesday after a lower-than-expected 0.1% rise in the July producer price index fueled hopes the Federal Reserve will soon be able to pause its aggressive rate hiking cycle. The S&P 500 is up over 1%, while the tech-heavy Nasdaq leads the rally with a 1.5% spike.

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The tame wholesale inflation reading, following last month's surprise drop in consumer prices, has investors enthusiastically buying on expectations the Fed could hold interest rates steady at their September meeting if upcoming CPI data shows further moderation.

While equity markets were oversold coming into this week, the upbeat inflation figures may represent the "true flush" that ushers in a sustained rebound, analysts say. The rally underscores how badly investors want reassurance that the Fed's front-loaded rate hikes are working to tame price pressures without tanking the economy.

Dow stocks are also climbing, bouncing back from earlier losses driven by Home Depot's reduced sales outlook for the year.

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