Wall Street Rallies as August Inflation Cools, Easing October Rate-Hike Bets

US stocks climbed on Wednesday after the Federal Reserve’s preferred inflation gauge came in cooler than expected for August, easing fears that the central bank will raise interest rates at its October meeting.

The core Personal Consumption Expenditures (PCE) price index rose 0.2% month-over-month and 3.0% year-over-year in August, according to Commerce Department data released Wednesday — below economists’ expectations of 0.3% and 3.3% respectively, the Wall Street Journal reported. Headline PCE rose 3.4% year-over-year, also softer than the 3.7% forecast.

The tech-heavy Nasdaq Composite gained about 1%, while the S&P 500 added roughly 0.5%, with the Dow little changed in late trading, according to live market coverage from the Journal and Barron’s.

Bond markets welcomed the print too: the two-year Treasury yield fell to around 4.84%, though the 10-year held near 5.24% — just below Tuesday’s multi-decade high.

Traders now see only about a 35–42% chance of a Fed rate hike at the late-October meeting, according to CME FedWatch data cited by multiple outlets, down from roughly 71% a week ago. Dovish remarks from New York Fed President John Williams on Tuesday — who said there was “no need for urgency” — had already begun cooling rate expectations.

Adding to the upbeat mood, the Commerce Department revised second-quarter GDP growth sharply higher to 2.2% from 1.5%, while September private payrolls rose by 90,000, topping forecasts, ADP reported.

Attention now turns to chipmaker Micron’s earnings after the close and Friday’s September jobs report.

Sources

Wall Street Journal — stock market live coverage: https://www.wsj.com/livecoverage/stock-market-today-dow-sp-500-nasdaq-09-30-2026

Barron’s — live stock market coverage: https://www.barrons.com/livecoverage/stock-market-news-today-093026/card/stocks-rally-as-wall-street-hopes-for-a-rate-pause-in-october-nYDMcHgePoMbFWsDoO65

Investopedia — Stock Market Today: https://www.investopedia.com/stock-market-today-dow-jones-s-and-p-500-09302026-12148860