Dow rises 140 points as softer inflation, BlackRock, Paypal lift US stocks

• PPI data came in below expectations, reinforcing Tuesday's softer CPI report and lowering probability of a July Fed rate hike to 16-17% from over 40%
• BlackRock beat quarterly earnings estimates supported by higher client assets during the market rally, while Morgan Stanley topped profit expectations on stronger M&A activity
• PayPal stock jumped on a joint $60.50 per share acquisition offer from Stripe and Advent International, while oil prices remained elevated above $79 per barrel due to US military strikes against Iran

Market Summary: US Stocks Rise on Softer Inflation Data

Key Market Movements

US equity markets opened higher on Wednesday, with the Dow Jones gaining 148 points (+0.28%), the S&P 500 up 0.47%, and the Nasdaq advancing 0.67%. The rally was driven by softer-than-expected Producer Price Index (PPI) data, following Tuesday's encouraging Consumer Price Index (CPI) report.

Inflation and Fed Policy

The weaker inflation readings significantly altered Federal Reserve expectations. The probability of a July rate hike dropped sharply to 16-17% from over 40% before the CPI release. However, markets still anticipate at least one rate increase later this year, with high probability for a September hike. Fed Chair Kevin Warsh cautioned that one inflation reading isn't sufficient to declare victory over price pressures.

Corporate Earnings Highlights

BlackRock surged 5% after beating Q2 earnings estimates, supported by higher client asset values during the market rally. Morgan Stanley exceeded profit expectations, benefiting from stronger M&A activity.

PayPal rallied approximately 15% on reports that Stripe and Advent International jointly offered to acquire the company for $60.50 per share.

Elevance Health dropped 11% despite raising its annual profit forecast, as the outlook disappointed investors.

Sector Performance

Semiconductor stocks declined despite ASML raising its outlook for the second time this year on AI-driven demand. The VanEck Semiconductor ETF traded lower, with Intel and Lam Research falling over 0.5%.

Geopolitical Concerns

Oil prices remained elevated following US military strikes against Iran. WTI crude rose 0.6% above $79/barrel, while Brent gained 0.7% above $85/barrel, tempering broader market optimism.