• Dow Jones rallied 300 points in choppy trading on Tuesday.
• Equities found higher ground on Tuesday as US inflation pressures ease.
• After cooling PPI print, US CPI inflation remains in the barrel for Wednesday.

The Dow Jones Industrial Average (DJIA) found the gas pedal on Tuesday, rising 300 points after US Producer Price Index (PPI) inflation eased more than expected in July. This gave stocks a chance to breathe and sent the DJIA into 39,700.00. 

US PPI inflation eased to 2.2% YoY in July, falling below the expected 2.3% and declining even further from the previous period’s revised 2.7%. Core PPI inflation also declined to 2.4% for the year ended in July, dropping below the forecast 2.7% and falling well below the previous 3.0%. Continued declines in US inflation pressure bolstered risk appetite in the US market session, and market bets of a 50 basis point double-cut in September from the Federal Reserve (Fed) rose to 55%, according to the CME’s FedWatch Tool.

US Consumer Price Index (CPI) inflation is the week’s key data print, slated for Wednesday. Core CPI inflation is forecast to tick down to 3.2% YoY from 3.3%. Markets have fully priced in at least a quarter-point cut from the Fed on September 18, and continued easing in inflation metrics will likely spark a further dogpile into bets of a double cut.