04:31 PM EDT, 08/13/2025 (MT Newswires) -- US equity indexes rose on Wednesday, with the Dow Jones Industrial Average climbing over 463 points, as a drop in government bond yields and the dollar helped validate a strong probability that the Federal Reserve will cut interest rates in September.

The Nasdaq was up 0.1% to 21,713.14, extending gains from Tuesday, and the S&P 500 rose 0.3% to 6,466.58. The Dow Jones Industrial Average climbed 1% to 44,922.27. While the Nasdaq and the S&P 500 posted fresh records intraday, the Dow headed toward its all-time high.

Healthcare, consumer discretionary, and materials led the gainers toward the close of trading. The communication services sector was among the trio of decliners.

Treasury Secretary Scott Bessent joined the call for rate cuts in an interview on Bloomberg TV. "Rates are too constrictive...We should probably be 150 to 175 basis points lower," Bessent said. "There's a very good chance of a 50 basis-point rate cut" in September, Bessent added.

The odds of a 25-basis-point cut in September were 96% as of late Wednesday afternoon, according to the CME FedWatch Tool. The remaining 4% likelihood was for a 50-basis-point reduction next month.

For investors, the concern this week was that a hot July consumer price report would have removed the prospects of a September cut altogether, particularly if the tariff impact became more evident, according to a Wednesday note from Deutsche Bank.

"So, the fact that CPI was broadly as expected was met with relief, leading to equity gains and tighter credit spreads as investors became increasingly confident about another rate cut," the note said.

US Treasury yields fell, with the 10-year yield down 5.7 basis points to 4.24% and the two-year rate was off by five basis points to 3.68%.

The ICE US Dollar Index fell 0.3% to 97.83, trading close to its lows for the year.

Two Fed heavyweights offered a contrasting viewpoint on interest rates.

Atlanta Fed President Raphael Bostic (non-voter) noted the weakness seen in the July employment data and said lower-income consumers and small businesses are beginning to feel the impact of tariffs.

Further, Chicago Fed President Austan Goolsbee (voter) said tariff-related price pressures have begun to be seen in the available data and that their effects may not be transitory.

The 0.3% increase in core CPI in July is the largest since January, and the 3.1% year-over-year reading of the metric, which excludes the more volatile food and energy prices, is the highest since February, according to a Stifel note on Tuesday when the data was released.

"The acceleration in inflation [core CPI] reflects a rise in services costs - with services prices up 0.4% in June, the most since January - as well as evidence that some tariffs continue to filter into the economy," Lindsey Piegza, Chief Economist at Stifel, said in the note. "Prices for goods that are more sensitive to a rise in levies - furniture, apparel, and toys - for example, continued to rise at the start of the third quarter."

Gold futures rose 0.3% to $3,410.2 per ounce.