NEW YORK, July 12 (Xinhua) -- U.S. stocks jumped on Wednesday after new inflation data came in cooler than Wall Street expected and raised hopes that the Federal Reserve's rate hike cycle may be nearing its end.

The Dow Jones Industrial Average rose 86.01 points, or 0.25 percent, to 34,347.43. The S&P 500 added 32.90 points, or 0.74 percent, to 4,472.16. The Nasdaq Composite Index increased 158.26 points, or 1.15 percent, to 13,918.96.

Nine of the 11 primary S&P 500 sectors ended in green, with communication services and utilities leading the gainers by rising 1.51 percent and 1.47 percent, respectively. Meanwhile, health and industrials fell 0.28 percent and 0.20 percent, respectively.

U.S. stocks rose and bond yields fell after crucial June inflation report came out on Wednesday. The U.S. Bureau of Labor Statistics reported that the consumer price index (CPI) rose 3.0 percent on a yearly basis in June, lower than market expectations of 3.1 percent, marking the lowest level since March 2021. On a monthly basis, the index increased 0.2 percent, also below market expectations of 0.3 percent.

The so-called core CPI, which excludes volatile items like food and energy, rose 4.8 percent on a yearly basis and 0.2 percent on a monthly basis in June, below market expectations of 5.0 percent and 0.3 percent, respectively, according to the U.S. Bureau of Labor Statistics.

Financial markets buzzed at the U.S. open on Wednesday, with investors buoyed by a very promising inflation report, said Craig Erlam, senior market analyst at OANDA, a supplier of online multi-asset trading services.

"The report not only beat at the headline level but core actually slipped even further, dropping to 4.8 percent for the first time since October 2021. The monthly data was also extremely encouraging," he said.

"Of course, there's been plenty of setbacks over the last couple of years, so we don't want to get too carried away with one inflation report, but it really is about as good as we could have realistically hoped for," said Erlam.

"The Fed will embrace this report as validation that their policies are having the desired effect - inflation has fallen while growth has not yet stalled. But it most likely won't change their mind to raise interest rates later this month," according to George Mateyo, chief investment officer at Key Private Bank, in an interview with MarketWatch.

The Federal Open Market Committee (FOMC) still has around 92 percent probability to raise the benchmark interest rate by another 25 basis points at its July meeting, according to data from the CME FedWatch Tool on Wednesday afternoon. Some traders in interest rate derivatives, however, are betting that a July hike might be the Fed's last.

"A hike in July is pretty much nailed on, but after that it's all to play for," said Deutsche Bank strategist Jim Reid, in an interview with The Wall Street Journal.

Meanwhile, the U.S. economy showed an overall increase in activity in late May and June, according to the Fed's latest Beige Book report released on Wednesday.

"Economic expectations for the coming months generally continued to call for slow growth," said the central bank's latest report, which raised hopes again that the Fed could bring down inflation without crashing the economy.

Investors are now looking ahead to the start of second quarter earnings season, with big bank names like JPMorgan Chase, Citigroup and Wells Fargo due to release their results on Friday.