04:24 PM EDT, 08/14/2024 (MT Newswires) -- US benchmark equity indexes closed mostly higher Wednesday after official data showed consumer inflation rose as projected in July, while the annual pace of price growth unexpectedly slowed.

The Dow Jones Industrial Average increased 0.6% to 40,008.4, while the S&P 500 advanced 0.4% to 5,455.2. The Nasdaq Composite was little changed at 17,192.6. Financials led the gainers among sectors, while communication services saw the steepest decline.

In economic news, the US consumer price index increased 0.2% last month following a 0.1% drop in June, according to the Bureau of Labor Statistics. The latest reading was in line with a Bloomberg-compiled survey. Annually, inflation eased to 2.9% in July, the smallest increase since March 2021. The consensus view was for the annualized metric to remain unchanged at 3% growth.

"With the labor market showing clear signs of cooling and inflationary pressures subsiding, the Federal Reserve can confidently start to dial back its policy rate in September," TD said in a note to clients.

On Tuesday, government data showed US producer prices grew less than expected last month.

Stifel said Wednesday that a cooler-than-projected headline CPI, along with another month of easing producer price pressures "further strengthens the argument" for a reduction in interest rates in the near term.

"That being said, with the data still volatile and bumpy, even amid another month of broadly improving conditions, the pace of rate cuts is likely to be very slow and tempered, disappointing investors' expectations for a rush back to neutral, let alone an accommodative stance," the brokerage wrote.

The US two-year yield rose 1.8 basis points to 3.96%, while the 10-year rate dropped 1.7 basis points to 3.84%.

Mortgage applications in the US rallied last week to the highest level since January 2023 driven by a surge in refinance activity, the Mortgage Bankers Association said.

West Texas Intermediate crude oil decreased 1.5% to $77.18 a barrel Wednesday. Commercial crude stockpiles in the US rose by 1.4 million barrels to 430.7 million barrels through the week ended Friday, the Energy Information Administration said. The consensus was for a 2 million-barrel drop, according to a Bloomberg poll.

In company news, Kellanova ( K ) agreed to be acquired by confectionery and pet food company Mars in an all-cash deal worth $35.9 billion, including assumed net leverage. The packaged food maker's shares jumped 7.8%, the best performer on the S&P 500.

Cardinal Health ( CAH ) was among the top gainers on the S&P 500, up 3.7%, as the drug distributor raised its full-year earnings outlook after delivering higher fiscal fourth-quarter results that exceeded market estimates.

Alphabet's (GOOG, GOOGL) class A and C shares fell more than 2.3% each, among the steepest declines on the S&P 500 and the Nasdaq. The US Department of Justice is considering options such as a bid to break up the tech giant's Google ( GOOG ) unit after a recent court ruling found that the company monopolized the online search market, Bloomberg News reported Tuesday, citing unnamed sources.

Gold dropped 0.9% to $2,485.90 per troy ounce, while silver declined 0.8% to $27.57 per ounce.