US STOCKS-Wall St set to open sharply higher after softer-than-expected CPI data

Wall Street was set to open sharply higher on Wednesday after data showed a slower-than-expected rise in inflation last month, reducing bets on super-sized rate hike in September. U.S. annual consumer prices slowed to 8.5% in July. Economists polled by Reuters expected the Consumer Price Index to show year-on-year headline inflation of 8.7%, far above the Federal Reserve's target of 2%, but lower than last month's 9.1%.

Wall Street was set to open sharply higher on Wednesday after data showed a slower-than-expected rise in inflation last month, reducing bets on super-sized rate hike in September.

U.S. annual consumer prices slowed to 8.5% in July. Economists polled by Reuters expected the Consumer Price Index to show year-on-year headline inflation of 8.7%, far above the Federal Reserve's target of 2%, but lower than last month's 9.1%. Core inflation remained unchanged month-on-month at 5.9%, while economists were expecting a rise to 6.1%.

The market is now pricing in 33.5% chance of a 75 basis point increase in fund rates at the Fed's next meeting in September, compared with 67.5% before the data. At 8:41 a.m. ET, Dow e-minis were up 424 points, or 1.3%, S&P 500 e-minis were up 71.5 points, or 1.73%, and Nasdaq 100 e-minis were up 307.25 points, or 2.36%.

After a rough start to the year, the benchmark S&P 500 is up nearly 13% from its mid-June low, largely on expectations the Fed will be less hawkish than anticipated in its efforts to provide a soft landing for the economy.