01:43 PM EDT, 08/13/2024 (MT Newswires) -- US equity indexes jumped while government bond yields dropped after the headline and core producer price inflation data cooled more than forecast in July.

The Nasdaq Composite gained 2.3% to 17,167.2, with the S&P 500 up 1.5% to 5,423.4 and the Dow Jones Industrial Average 0.8% higher at 39,682.7. Energy was the lone decliner among sectors.

The CBOE's Volatility Index (VIX), known as the fear gauge, dropped 8.5% to 18.96.

In economic news, the US producer price index in July rose by 0.1% following a 0.2% increase in June, below the 0.2% gain expected in a survey compiled by Bloomberg. After excluding food and energy prices, the core PPI held steady, below the 0.2% gain expected and following a 0.3% increase in the previous month. The PPI was up 2.2% from a year earlier, while core PPI was up 2.4%, a slowdown from the June rates.

"A cooler-than-expected PPI report offers welcome support for those in favor of a near-term rate reduction," Lindsey Piegza, Stifel chief economist, said in a note. "That being said, the lack of consistency throughout the underlying components with an uptick in prices excluding food, energy and trade services puts even more focus on tomorrow's [consumer price index] release as an indication of the trend in price pressures."

Most Treasury yields fell, with the 10-year down 5.9 basis points to 3.85% and the two-year rate 7.1 basis points lower at 3.94%.

According to the CME Group's FedWatch Tool, the probability of a 50 basis point interest-rate cut at the Federal Reserve monetary policy meeting on Sept. 18 was almost 55% as of Tuesday afternoon. The likelihood of a 25 basis-point reduction is just over 45%.

West Texas Intermediate crude oil dropped 1.7% to $78.69 a barrel.

In company news, Starbucks ( SBUX ) named Brian Niccol as chair and chief executive officer, effective Sept. 9. Laxman Narasimhan stepped down as CEO and a board member. Chief Financial Officer Rachel Ruggeri will serve as interim CEO until Niccol, currently Chipotle Mexican Grill's ( CMG ) chair and CEO, takes over.

Shares of Starbucks ( SBUX ) soared 21%, the top gainer on the S&P and the Nasdaq. Chipotle slumped 6.5%, the biggest drop on the S&P.

Gold rose 0.2% to $2,508.91 an ounce, while silver fell 0.7% to $27.82.