The Dow Jones Industrial Average ticked up Wednesday after the release of more encouraging U.S. inflation data.

The 30-stock Dow climbed 242 points, or 0.61%, to end the day at 40,008.39. The S&P 500 inched up 0.38% to close at 5,455.21, and marked its fifth straight winning day. The Nasdaq Composite shook off earlier losses to close higher by just 0.03% at 17,192.60.

Consumer prices increased 2.9% year-over-year, down from 3% in June and the lowest reading since March 2021, the Bureau of Labor Statistics said on Wednesday. Month-over-month, prices ticked up 0.2%. Economists polled by Dow Jones expected a 0.2% increase from the prior month and a 3% gain year-over-year.

So-called core inflation, which strips out food and energy from the headline number, advanced 0.2% on the month, also in line with expectations.

The report comes a day after lighter-than-expected wholesale inflation figures gave stocks a boost. The Dow rose about 1%. The S&P 500 climbed 1.7%, while the Nasdaq gained 2.4%.

Investors had been looking toward the CPI reading to get a full-plated picture of the state of the economy, and to further solidify the prospect of an interest rate cut at the central bank's September meeting.

"It may not have been as cool as yesterday's PPI, but today's as-expected CPI likely won't rock the boat," said Chris Larkin, managing director of trading and investing for E-Trade from Morgan Stanley. "Now the primary question is whether the Fed will cut rates by 25 or 50 basis points next month."

Futures market pricing is roughly split down the middle between expectations for a quarter or half-percentage point reduction at central bank meeting on Sept.17-18, per the CME FedWatch Tool.
By the end of the year, traders expect a basis point shift.

"If most of the data over the next five weeks points to a slowing economy, the Fed may cut more aggressively," Larkin said.

Elsewhere, shares of Kellanova surged more than 7.8% following news that the company would be acquired by snack maker Mars in a $36 billion deal. Shares of Google-parent company Alphabet slipped 2.3% following news that the U.S. Department of Justice was weighing an effort to break up the technology behemoth.

All three major averages are now above their Aug. 2 closing level, which was the session before the global market sell-off on Aug. 5 that appeared to be related to an unwind of the yen carry trade and concerns about economic growth.

"While growth risks have increased, we believe the market has overreacted to a small number of soft data points, not a drastic change to the macro outlook." said Gargi Chaudhuri, chief investment and portfolio strategist at BlackRock.

Stocks close higher

Stocks closed higher on Thursday, with the S&P 500 earning its fifth-straight positive close after encouraging inflation data.

The broad market index added 0.38% to finish the session at 5,455.21. The Nasdaq Composite ticked up 0.03% to close at 17,192.60, while the Dow Jones Industrial Average gained 242 points, or 0.61%, to 40,008.39.

— Brian Evans

Mercury Systems heads for best day in 15 years on earnings

Mercury Systems was poised for its biggest one-day gain in more than a decade and a half following strong earnings.

The aerospace and defense technology stock jumped more than 19% in Wednesday afternoon trading. If that holds through session close, it would mark the best day for the stock since April 2009, when shares soared 20.5% in one session.

Wednesday's rally comes after Mercury posted 23 cents in earnings per share, excluding items, for the fourth fiscal quarter. That's a surprising figure given analysts polled by FactSet were expecting the company to report a loss of 6 cents a share.

Revenue came in at $248.6 million, above the consensus forecast of $231 million.

Shares also touched a new 52-week high in the session. The stock has climbed more than 11% in 2024.

— Alex Harring

Charles Schwab surges as much as 5% as assets climb and new accounts grow in July

Charles Schwab rose as much as 5% intraday Wednesday after saying premarket that "core net new assets" grew by $29 billion in July, more than double the year-earlier pace, while 327,000 new brokerage accounts were added last month (up 8% from last year and 5% from June 2024.)

After today's advance, Schwab shares are 5.2% lower year to date.

LPL Financial Holdings, another money manager, is performing even better on Wednesday, jumping as much as 9.6% and reducing its year-to-date loss to 5.9%.

Both companies next report results in mid-October.

Summer vacations may be contributing to market volatility, Certuity CIO says

The understaffed trading desks that are typical of the summer for financial firms may be contributing to the recent volatility in the stock market, said Scott Welch, chief investment officer at Certuity.

"This is August. Everybody's on vacation. ... This is a period of time when small noises can make big impacts on markets, undeservedly. So I think after Labor Day, as people start to pay attention to the election and as everybody's back at their desk working, I think that will give you the answer to the questions you're asking about whether or not we're in a rotation period," Welch said.

The underlying fundamentals of the economy and corporate earnings still look "okay" despite the big swings in the equity market, Welch said.

"It's not like we're on a precipice of anything. We might be slowing down, and that's okay, because that's normal," he added.

— Jesse Pound

Ed Yardeni says inflation should reach 2% by end of year, calls fight 'absolutely' done

Ed Yardeni believes that the battle against inflation has "absolutely" neared its end.

"I've been predicting since the summer of 2022 that we get to 2% to 3% by the end of last year and early this year, and we're basically there," the president of Yardeni Research told CNBC's "Squawk on the Street" on Wednesday. "We'll get to 2% by the end of the year."

He noted that shelter — which accounted for the majority of last month's increase — is a lagging factor, which could lead to potentially faster decreases in rent.

Yardeni also called the prospect of an inter-meeting rate cut from the Federal Reserve a "disaster" that could worsen the yen "carry trade." He expects the central bank to implement one 25 basis point cut this year.

— Samantha Subin

Goldman upgrades cloud-based bank company

Goldman Sachs believes the headwinds around cloud-based bank software company nCino are clearing, creating an attractive entry point into the underperforming stock.

Analyst Adam Hotchkiss upgraded nCino shares to buy from neutral on Wednesday.

Although the stock has underperformed other bank tech names in Goldman's coverage, the analyst believes imminent rate cuts and its partnerships can help it positively inflect.

More on the call can be found here.

— Hakyung Kim

Investors should 'stop overreacting' to periods of volatility, UBS says

The latest rebound in equities, coupled with reassuring producer price index data, should serve as a confirmation to investors that inflation is easing, according to UBS.

"During last week's equity market sell-off, we argued that the unwinding of the yen carry trade was likely to fade and that U.S. recession fears looked premature," UBS analyst Mark Haefele wrote in a Wednesday note. "The subsequent market performance has underlined our view that investors should avoid overreacting to bouts of volatility, especially during periods of thin summer liquidity."

Haefele added that further swings in the market are still possible. Investors have been reacting to data releases that typically fail to generate such volatility as they wait for signs that U.S. economic growth is slowing "too abruptly" and that the Fed has taken too long to announce a rate cut, he said.

— Pia Singh

Stocks making the biggest moves midday

Here are the stocks on the move midday:

Brinker International – The stock plummeted around 12% after the Chili's parent issued a weaker-than-expected profit forecast for the full year and reported disappointing fiscal fourth-quarter earnings. The company posted adjusted earnings of $1.61 per share, below the StreetAccount consensus estimate of $1.72 per share. Brinker also expects earnings per share between $4.35 and $4.75 for fiscal 2025, below the consensus estimate of $4.78.

Victoria's Secret – Shares surged more than 16% after the retailer announced the appointment of former Savage X Fenty CEO Hillary Super as the company's CEO, effective Sept. 9. The company also provided preliminary second-quarter results, with adjusted operating income and adjusted diluted earnings per share coming in at a range above prior guidance.

Flutter – The stock jumped more than 9% after the FanDuel parent reported better-than-expected second-quarter revenue. Flutter posted $3.61 billion for the period, which is above the StreetAccount consensus forecast of $3.4 billion. The sports betting company also raised its full-year guidance.

Read the full list here.

— Sean Conlon

Yen inches down against the dollar on Wednesday

The Japanese yen was 0.1% lower against the dollar at 146.66 yen per dollar on Wednesday.

After sharply appreciating early last week following the Bank of Japan's interest rate hike, the yen has begun to lose some of its ground against the dollar.

The yen strengthened to 141.66 yen against the dollar on Monday, its lowest level on January. Week to date, however, the yen is now down 0.2% against the greenback.

— Hakyung Kim

Apple aims for 6-day winning winning streak

Apple shares rose slightly on Wednesday, putting the iPhone maker on track for a sixth straight day of gains. That would mark the stock's longest winning streak since a seven-day run in early July.

— Fred Imbert

The VIX — Wall Street's 'fear gauge' — falls back below 18

The CBOE Volatility Index (VIX) — known as Wall Street's 'fear gauge' — has dropped back below 18, after spiking above 65 during last week's sell-off. The Vix was last down 3.5% to 17.5.

Below 20 is a normal reading suggesting a risk-on bias in markets. On the other hand, a reading above 20 is a bearish indicator, reflecting heightened levels of fear and uncertainty.

— Sarah Min

Stocks tick higher after soft inflation report

Stocks opened higher on Wednesday after consumer prices eased below 3% annually last month.

The S&P 500 ticked up 0.25%, while the Nasdaq Composite added 0.41%. The Dow Jones Industrial Average advanced 16 points, or 0.03%.

— Brian Evans

Economist: 'Net, net, the inflation outbreak is over'

Wednesday's consumer price index reading offered good news for those tracking prices and hoping for interest rate cuts from the Federal Reserve, according to FWDBONDS chief economist Christopher Rupkey.

"Net, net, the inflation outbreak is over and the overall picture of core consumer price pressures is quite benign, and even reminiscent actually of the spring and summer of 2019 before the pandemic struck," Rupkey said.

Rupkey said the "flare-up" in inflation seen at the start of the year has ended. Though the economist said inflation as a whole "isn't dead," he pointed to deflation in commodity prices, which can balance out moderate price increases seen in some service areas.

"Any Fed official waiting for a little more data to make the decision on whether to cut interest rates got it in spades this morning," he said. "The risks for Fed officials at this point are more on the downside for the economy and labor markets rather than on the upside for inflation."

Rupkey said he expects Fed Chair Jerome Powell to give a "thumbs up" for a rate cut during next week's symposium in Jackson Hole.

— Alex Harring

Consumer prices rose 0.2% in July, as expected

The consumer price index, a gauge of what consumer pay for goods, rose 0.2% last month, matching a Dow Jones estimate, as investors look for clues on future Federal Reserve moves. Year over year, CPI came rose 2.9%, slightly less than expected.

— Fred Imbert

See the stocks moving before the bell

These are some of the stocks making notable moves before the bell:

• Kellanova — Shares jumped 7.5% after the foodmaker agreed to be acquired by snackmaker Mars for $83.50 per share in cash. 
• Alphabet — The megacap technology stock shed 1.2% after Bloomberg News reported U.S. regulators are weighing a break-up of the tech giant.
• Brinker International — Shares of the restaurant chain behind Chili's plunged 15% after Brinker International posted disappointing fiscal fourth-quarter earnings and weaker-than-expected guidance for full-year earnings.

See the full list here.

— Alex Harring

Kellanova rises on Mars deal

Kellanova shares rose more than 6% in the premarket after the foodmaker agreed to be acquired by snackmaker Mars for nearly $30 billion. Mars will pay $83.50 per share in cash.

"The transaction maximizes shareholder value through an all-cash transaction at an attractive purchase price and creates new and exciting opportunities for our employees, customers, and suppliers. We are excited for Kellanova's next chapter as part of Mars, which will bring together both companies' world-class talent and capabilities and our shared commitment to helping our communities thrive," Kellanova CEO Steve Cahillane said in a statement

— Fred Imbert

Alphabet shares slip on regulatory break-up report

Alphabet shares were down more than 1% after Bloomberg News reported U.S. regulators are weighing a break-up of the tech giant.

Per the report, which cites people with knowledge of the discussions, the unites most likely to be divested are Google's Chrome browser and Android operating system if the Justice Department pushes for a break-up.

Google did not respond to CNBC's request for comment. The Justice Department did not respond to CNBC's request for comment.

— Fred Imbert

CPI data expected to show small month-over-month uptick in inflation after June decline

Wednesday's consumer price index data release for July is likely to show a rise of 0.2% month over month, according to economists surveyed by Dow Jones. In June, CPI actually declined 0.1% month over month.

However, economists do expect CPI to be up 3.0% year over year, the same as the prior reading.

The core CPI reading, which excludes food and energy prices, is also expected to show an increase of 0.2%. Core CPI rose 0.1% month over month in June.

— Jesse Pound

After hours movers: Alphabet dips after report that DOJ is considering a Google breakup

Here are some of the notable stock moves in extended trading Wednesday.

Alphabet — Shares of the tech giant fell less than 1% after Bloomberg News reported that the Justice Department is considering a push to break up Google. The report comes after Alphabet lost an antitrust case over its search engine last week.

Flutter Entertainment — Shares of the gaming company surged more than 10% after second-quarter results beat expectations. The parent company of Fanduel reported $3.61 billion in revenue, topping the $3.40 billion expected by analysts, according to LSEG. Flutter also raised its full-year guidance.

Nu Holdings — Shares of the Brazil-based financial firm rose 3.5% after a stronger-than-expected second quarter. Nu reported $563 million in adjusted earnings on $2.85 billion of revenue. Analysts were expecting an adjusted profit of $460.3 million on $2.57 billion of revenue, according to FactSet.

— Jesse Pound

Some analysts see even more upside for Starbucks' stock

Starbucks announced Tuesday that it's replacing CEO Laxman Narasimhan with Chipotle CEO Brian Niccol, effective immediately, sending shares higher by 24.5% during Tuesday's trading session. The stock closed at $95.90 per share.

Here's what analysts have to say about it:

• Bank of America: Niccol has a skill set that's "well-suited" for a Starbucks turnaround given his expertise and track record of execution at Chipotle, analyst Sara Senatore said on the announcement. Senatore expects an immediate focus on Starbucks' brand and marketing strategy. She kept her buy rating and a bullish $112 price target.
• Morgan Stanley: Analyst Brian Harbour maintained his overweight rating and $98 price target — among the least bullish of several analysts' calls. "We think this will be viewed as an unmitigated positive for SBUX," Harbour said, referring to the CEO transition as a strong catalyst for shares. Still, he emphasized that "Starbucks is not Chipotle, with a more complicated global business, licensed partners, and real challenges with retail operations/labor (arguably the most important factor today)."
• Wells Fargo: "The SBUX bull case is playing out with Elliott, Starboard & arguably the top CEO in the industry joining forces," analyst Zachary Fadem said. He kept his overweight rating and raised his price target by $15 to $105, and said the move is a big win for Starbucks that warrants a higher P/E.
• TD Cowen: Analyst Andrew Charles, meanwhile, upgraded the stock to buy and upped his price target by $24 to $105. Niccol is the "right person for the job" following his successful tenure at Chipotle and Taco Bell, he said, adding that "the SBUX playbook is similar to CMG in 2018."

— Pia Singh

Fed's Bostic encouraged by data, sees rate cuts coming

Atlanta Federal Reserve President Raphael Bostic said he's encouraged by recent economic data and expects the central bank to lower interest rates by the end of the year.

"I am willing to wait, but it's coming," Bostic said, speaking at an event in Atlanta. A voter this year on the Fed's rate-setting open market committee, Bostic said he wants to see "a little more data" before making a decision.

Traders expect the Fed to enact its first cut in more than four years when it meets in September.

—Jeff Cox

Futures open little changed

Equity futures were calm when trading reopened at 6 p.m. in New York. Futures for the Dow, S&P 500 and Nasdaq 100 were all within 0.1% off the flatline.

— Jesse Pound