U.S. stocks rallied on Wednesday to end the session at their highest levels in almost two months after the key consumer price index reading showed July inflation slowed more than expected, raising hopes that the Fed might adopt a less aggressive stance toward interest rate hikes. All the three major indexes ended in positive territory. How Did The Benchmarks Perform? The Dow Jones Industrial Average (DJI) climbed 1.6% or 535.10 points to close at 33,309.51 points. The S&P 500 rallied 2.1% or 87.77 points to end at 4,210.24 points. Consumer discretionary, communication services, material and tech stocks were the biggest gainers. The Technology Select Sector SPDR (XLK) gained 2.7%, while the Consumer Discretionary Select Sector SPDR (XLY), Communication Services Select Sector SPDR (XLC) and Materials Select Sector SPDR (XLB) each advanced 2.8%. All the 11 sectors of the benchmark index ended in positive territory. The tech-heavy Nasdaq soared 2.9% or 360.88 points to end at 12,854.80 points. The index also ended its three-day losing streak. The fear-gauge CBOE Volatility Index (VIX) was down 9.32% to 19.74. Advancers outnumbered decliners on the NYSE by a 5.69-to-1 ratio. On Nasdaq, a 3.34-to-1 ratio favored advancing issues. A total of 11.33 billion shares were traded on Wednesday, higher than the last 20-session average of 10.98 billion. July Inflation Data Boots Investors’ Confidence Stocks closed lower on the first two days of the week in choppy trading sessions as investors awaited key inflation data that would help them gauge Fed’s stance toward interest rate hike in its September meeting. The much-awaited inflation data, which was released on Wednesday brought some relief to investors as the consumer price index (CPI) for July remained unchanged after increasing 1.3% in June. Also, the Core CPI, which excludes the volatile energy and food prices, increased smaller-than-expected in July. Prices are still at record high but the fresh reading definitely came as a big relief to investors. The Fed will take into consideration this report ahead of its policy meeting in September when they are expected to go for another interest rate hike. The Fed increased interest rates by 75 basis points each in its last two meetings. Investors have been trying to assess if the Fed will soften its rate-hike stance in its next meeting as they fear that aggressive interest rate hikes could result in a further economic slowdown. The fresh reading on inflation gave investors’ confidence a much-required boost, sending stocks on a rally. Tech stocks were one of the best performers on Wednesday, outpacing the broader market. shares of Meta Platforms ( META Quick Quote META - Free Report) jumped 5.8%, while Netflix, Inc. ( NFLX Quick Quote NFLX - Free Report) rallied 6.2%. Netflix carries a Zacks Rank #3 (Hold). You can see . the complete list of today's Zacks #1 Rank stocks here Wednesday’s broad-based rally also saw the Nasdaq exiting bear-market territory after 107 sessions. The tech-heavy index is now 22.75% up from its 2022 closing low of 10646.10, which it hit on Jun 16. Economic Data The Labor Department said on Wednesday that CPI for July remained unchanged after soaring 1.3% in June. On a year-over-year basis, CPI increased 8.5%, slower than economists’ expectations of 8.7% and a lot slower than the 41-year high of 9.1% attained in June. Core CPI, which excludes the volatile energy and food prices, increased at a slower pace of 0.3% in July compared to 0.7% in June. On a year-over-year basis, Core CPI remained steady at 5.9%.