United States benchmark averages finished higher on Wednesday (Thursday AEST), buoyed by another round of encouraging inflation data and a strong start to the second-quarter earnings season.
The Dow Jones Industrial Average rose 150.9 points, or 0.3%, to 52,659.2. The S&P 500 gained 28.8 points, or 0.4%, to 7,572.4, while the Nasdaq Composite climbed 162.2 points, or 0.6%, to 26,269.2.
Investor sentiment was supported by another day of solid bank earnings, extending the positive momentum at the start of the reporting season.
BlackRock and Morgan Stanley both exceeded quarterly profit expectations. BlackRock jumped 6.6%, while Morgan Stanley added 0.4%.
PayPal was among the session's standout performers, soaring 17.2% after Reuters reported that Stripe and private equity firm Advent International had jointly offered to acquire the payments company for US$60.50 per share, representing a premium of about 28% to Tuesday's closing price.
Markets also welcomed fresh signs that inflation pressures may be easing. The Labor Department's Producer Price Index (PPI) report followed Tuesday's softer Consumer Price Index (CPI) release, marking a second consecutive day of better-than-expected inflation data.
The figures were released as newly confirmed Federal Reserve Chair Kevin Warsh completed his second day of testimony before the Senate Banking Committee.
Taken together, the CPI and PPI reports suggest inflation moderated last month, although price pressures remain elevated amid the ongoing U.S.-Israeli conflict with Iran.
The data eased near-term concerns that the Federal Reserve may need to raise interest rates again this month.
According to the CME Group FedWatch Tool, financial markets are now pricing in an 11.2% probability of a 25-basis-point rate hike at the conclusion of the Fed's July meeting, down sharply from 31.0% a week earlier.
However, investors remain cautious. The latest inflation figures reflect conditions from last month, when hopes for a diplomatic resolution in the Middle East were improving.
Those expectations have since deteriorated as the U.S. and Iran intensified airstrikes in a struggle for control of the Strait of Hormuz, raising the risk of renewed energy-driven inflation.
In the bond market, U.S. Treasury yields moved lower, with the 10-year yield falling 0.8% to 4.549% and the two-year yield declining 1.3% to 4.137%.
