Stock futures surge, Treasury yields plummet as CPI shows inflation easing slightly in July

U.S. stock futures soared Wednesday morning following the release of July inflation data which showed price pressures easing by a wider margin than economists had anticipated. S&P 500 futures were up 66 points, or 1.6%, to 4,188, while futures for the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.11% were up 407 points, or 1.2%, to 33,144. Nasdaq 100 futures were up 304 points, or 2.4%, to 13,340. The data also spurred a drop in Treasury yields, with the 2-year yield dropping 18 points to 3.075, while the 10-year yield was down 10 points at 2.695. While the two-year yield remained higher than the 10-year yield after the data, the depth of the inversion narrowed somewhat. The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY +0.36% was down 0.4% after the data, while gold prices were also down 0.3%. The headline CPI number for July came in at 8.5%, compared with 8.7% expected by economists polled by FactSet, and the 9.1% reading from June, which had marked the highest pace of inflation in four decades. Traders of interest-rate derivatives now see a 50 basis point rate hike as the most likely outcome during the Federal Reserve's September policy meeting, according to the CME's FedWatch tool. As of yesterday, odds had been slanted in favor of a 75 basis point hike following Friday's surprisingly hot jobs report.