01:32 PM EDT, 07/11/2024 (MT Newswires) -- US equity indexes traded mixed Thursday afternoon as government bond yields slid after the third straight monthly deceleration in annual inflation boosted bets in favor of an interest-rate cut in September.

The Nasdaq dropped 1.8% to 18,312.8, and the S&P 500 fell 0.8% to 5,587.6 in recent trading. The Dow Jones Industrial Average advanced 0.1% to 39,768.9. Among sectors, communication services, technology, and consumer discretionary paced the decliners, while real estate, utilities, and industrials led the gainers.

The US 10-year Treasury yield tumbled 10.8 basis points to 4.17%, with the two-, five-, and 30-year rates also slumping.

The probability that the Federal Open Market Committee will cut interest rates by 25 basis points in September soared to 84% by Thursday afternoon from 70% a day earlier, according to CME FedWatch, as data from the Bureau of Labor Statistics showed Thursday month-over-month headline and core inflation rates were the weakest since May 2020 and January 2021, respectively.

The US seasonally adjusted consumer price index slipped 0.1% in June from May, compared with the 0.1% increase expected in a survey compiled by Bloomberg and a flat reading in May. Core CPI, which excludes food and energy prices, advanced 0.1%, below the consensus estimate for a 0.2% gain. Core CPI was up 0.2% in May.

The year-over-year headline and core CPI slowed to 3% and 3.3%, respectively, from 3.3% and 3.4% in the previous month. Headline CPI slowed in April and May after increasing earlier this year.

Details of the inflation report showed transportation prices fell 1.3% in June because of a 0.2% decline in new vehicle prices and a 1.5% drop in used cars and trucks prices. Additionally, airline fares slumped 5%, marking the fourth consecutive month of retreat. Additionally, commodities prices slipped 0.4%.

"This is exactly what the [Federal Open Market Committee] is looking for," TD Economics said while noting that the super-core measure slipped into deflationary territory and the long-awaited adjustment lower on shelter prices also appeared underway.

"Encouragingly," the note said, the three-month annualized rate of change on core inflation fell sharply to 2.1%, the softest reading since March 2021. "Should the next two inflation readings remain on the softer side, a September rate cut looks to be very much in play."

The US Dollar index fell 0.6% to 104.43, while gold surged 1.7% to $2,419.82 an ounce. Silver climbed 2.3% to $31.66.

In company news, Delta Airlines (DAL) shares slumped 4.9%, the second-biggest decline on the S&P 500, after the carrier posted lower Q2 adjusted earnings.

Shares of Costco Wholesale ( COST ) dropped 3.7% after the company announced an increase in membership fees and reported an increase in net sales over five weeks.

West Texas Intermediate crude oil climbed less than 0.4% to $82.41 a barrel.