Investing.com-- The Dow rallied to close above 40,000 level Wednesday as data pointing to further slowing in inflation is expected to bring the Federal Reserve a step closer to begin the rate-cutting cycle next month.
At 16:00 ET (20:00 GMT), the Dow Jones Industrial Average traded 242 points, or 0.6%, higher to close at 40,008.12. The S&P 500 rose 0.3% and NASDAQ Composite was flat.
CPI data add to evidence of cooling inflation
The U.S consumer price index slowed to a 2.9% pace from a 3.0% pace in June, compared with economists estimates for 3%.
Stripping out more volatile items like food and fuel, the "core" number climbed by 3.2% in the twelve months to July, below projections of 3.3%.
The report comes just a day after coole-than-expected July producer price index that added to signs that the Fed's policies are working to bring down inflation.
"The Fed has been desperate for signs of the impact of their rate hikes on demand and inflation, and they have finally started seeing it since May," Jefferies said in a Wednesday note.
Intel sells Arm stake; Google in legal spotlight; Kellanova in deal fever
Intel (NASDAQ:INTC) fell more than 2% sold its 1.18 million share stake in British chip firm Arm Holdings (NASDAQ:ARM) in the second quarter, a regulatory filing showed on Tuesday.
The chipmaker said earlier this month that it would cut more than 15% of its workforce and suspend its dividend amid a pullback in spending on traditional data center semiconductors and a shift towards AI chips.
Kellanova (NYSE:K) rose nearly 8% after the packaged foods maker agred to be acquired by chocolate giant Mars at price of $83.50.
Alphabet Inc Class A (NASDAQ:GOOGL) fell 2% on a Bloomberg report, citing unnamed sources, that the U.S. Department of Justice is reportedly mulling plans to rein in Google's dominance in online search including a break up.
On the earnings front, Cardinal Health Inc (NYSE:CAH) climbed nearly 4% after the health care company raised its guidance for the full year following fiscal Q4 results that beat analyst estimates.
(Peter Nurse, Ambar Warrick contributed to this article.)