Shares of banks and other financial institutions rose sharply as traders bet the sector would benefit from a more measured pace of rate increases.
Investors piled into bets that the Federal Reserve would slow rate hikes after a report of moderated consumer inflation in July.
Treasury yields tumbled in the wake of the report as investors positioned themselves for a less radical rate increase at the Fed's next meeting.
Federal-funds futures market, where investors take positions on likely Fed moves, priced in a 73% chance of the Fed raising rates by 50 basis points in September, up from 32% a day earlier, according to CME Group.
"Inflation is decelerating and [the Fed's] goal to deliver a soft landing seems reachable," said Edward Moya, senior market analyst at foreign-exchange brokerage OANDA Group.
Write to Rob Curran at rob.curran@dowjones.com
(END) Dow Jones Newswires
08-10-22 1659ET
