01:24 PM EDT, 07/26/2024 (MT Newswires) -- US equity indexes soared after midday on Friday as a second consecutive month of moderation in a closely monitored inflation gauge sent government bond yields lower while quarterly earnings came in strong.

The Nasdaq rose 1.4% to 17,425.4, with the S&P 500 up 1.5% to 5,479.8 and the Dow Jones Industrial Average 2% higher at 40,721.9. All sectors were up intraday, with industrials, materials, and technology among the top gainers.

According to the CME Group's FedWatch Tool, the probability that the Federal Open Market Committee will cut interest rates by 25 basis points in September stood at over 95% by Friday afternoon, as inflation continued to cool in June after the earlier reprieve in May.

The growth in the annual headline personal consumption expenditures price index eased to 2.5% last month from 2.6% in May, as per the US Bureau of Economic Analysis, but was above the Street's 2.4% forecast. The Fed's preferred core measure, which excludes food and energy, was unchanged at 2.6%, compared with the 2.5% consensus. The inflation rate grew 0.1% sequentially in June from a flat reading in May, while the core measure climbed 0.2% from 0.1%. Both metrics were in line with expectations.

"Inflation continued to cool in June after earlier reprieve in May, perpetuating the market's expectations for a September rate cut," Stifel Chief Economist Lindsey Piegza said in a note. "Coupled with the Fed's assessment of cooling labor market conditions, two back-to-back months of improving disinflation may prove to be sufficient justification for [Fed Chair] Powell to offer the reprieve investors have been desperately awaiting."

Most Treasury yields declined, with the 10-year down five basis points to 4.21%, and the two-year rate retreating 5.4 basis points to 4.39%.

Gold jumped 1.4% to $2,434.20 an ounce, and silver rose 0.4% to $28.09.

In company news, 3M ( MMM ) lifted the lower end of its full-year adjusted earnings outlook after reporting Q2 results above market estimates. Shares soared 19.3% intraday, the top performer on the S&P 500 and the Dow.

BofA Securities upgraded Mohawk Industries ( MHK ) to buy from underperform while adjusting its price target to $177 from $120. The company reported Thursday a surprise increase in Q2 earnings, and its guidance for Q3 was above analysts' projections. Shares surged 19% intraday, the second-highest return on the S&P 500.

DexCom ( DXCM ) shares sank 41.6% intraday, the steepest decline on the S&P 500 and the Nasdaq, after the company lowered its 2024 revenue guidance.

West Texas Intermediate crude oil slumped 1.1% to $77.44 a barrel.