US stocks climb post softer US inflation data

US stocks climbed after a softer than expected inflation report for June revived hopes the Federal Reserve was nearing the end of its interest rate increases.

The Dow Jones Industrial Average was up 265 points or 0.8%, while the S&P 500 was up 0.9% and the NASDAQ Composite was up 1.2%. June inflation stokes hopes for end to rate hikes

Consumer prices cooled in June, raising hopes that the Federal Reserve would reach the end of its rate hikes sooner rather than later. It is still expected to raise them by another quarter of a percentage point when it meets later in July.

Headline and core inflation in the US rose at a slower-than-expected pace last month. The Bureau of Labor Statistics said the consumer price index increased 3.0% annually, down from 4.0% in May. Economists had forecast a rise of 3.1%.

It was the lowest level in more than two years and represented a steep deceleration from 9.1% last June. For the month, CPI rose 0.2%, up from 0.1% in the prior month. Estimates had called for 0.3%.

The cooler reading stoked hopes the rate hikes could end soon. The Dow is already on pace for its best week since March. Another closely watched reading – producer prices – is due out Thursday morning. Later today, the Fed will release its Beige Book, which is a periodic survey of its district banks. The report helps break down economic and financial trends being observed throughout the country.

Microsoft Corporation shares were up 1.9% after a federal judge cleared the way for it to close its acquisition of Activision Blizzard as early as next week. Federal competition regulators had tried to block the deal on antitrust grounds.

Bank stocks are the headline earnings this week, kicking the season off on Friday with reports from JPMorgan, Citigroup, and Wells Fargo. JPMorgan was up 1.1% in Wednesday trading.