UPDATE: 10:20 a.m.

NEW YORK >> Stocks closed higher on Wall Street after a report showed inflation cooled a bit more than expected last month.

The S&P 500 rose 0.7% today. The Dow added 86 points, or 0.3%, and the Nasdaq rose 1.2%. Treasury yields tumbled in the bond market as the cooler inflation data pushed traders to ratchet back bets for hikes to interest rates by the Federal Reserve later this year.

Stocks were up even more earlier in the day on hopes for a coming halt to rate hikes. But analysts say they still expect rates to remain high for a while.

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NEW YORK >> Wall Street is rising today after a report showed inflation cooled a bit more than expected last month, which hopefully takes some more pressure off the economy.

The S&P 500 was 0.7% higher in afternoon trading and was up more than 1% earlier in the morning. The Dow Jones Industrial Average was up 63 points, or 0.2%, at 34,401, as of 3:25 p.m. Eastern time, and the Nasdaq composite was 1% higher.

The rally was widespread, and everything climbed from stocks of flashy Big Tech behemoths to banks to staid utility companies.

The U.S. government’s latest update on inflation showed that consumers paid prices for gasoline, food and other items that were 3% higher overall in June than a year earlier. That’s down from 4% inflation in May and a bit more than 9% last summer. Perhaps more importantly, it was a touch lower than economists expected.

High inflation has been at the center of Wall Street’s problems because it’s driven the Federal Reserve to jack up interest rates at a blistering pace. Higher rates undercut inflation by slowing the entire economy and hurting investment prices, and they’ve already caused damage to the banking, manufacturing and other industries.

Traders remain nearly convinced the Fed will raise the federal funds rate at its meeting in two weeks to a range of 5.25% to 5.50%, which would be its highest level since 2001. But expectations are also climbing for that to be the final increase after rates started last year at virtually zero.

“They’ll probably still pull the trigger on a hike, but it will be based on symbolism more than substance,” said Brian Jacobsen, chief economist at Annex Wealth Management. He pointed to another report earlier this month that showed a slowdown in U.S. jobs growth, which could also take some pressure off inflation.

Treasury yields tumbled in the bond market after the cooler inflation data pushed traders to trim bets for Fed action later this year.

The 10-year Treasury yield fell to 3.86% from 3.98% late Tuesday. It helps set rates for mortgages and other important loans.

The two-year Treasury yield dropped to 4.74% from 4.89%. It tends to follow expectations for the Fed more closely.

To be sure, even if the Fed does halt its hikes, analysts warn the economy and financial markets still haven’t seen the full effect of all the past increases. Rate hikes take a notoriously long time to filter through the system, and unanticipated pain can occur.

That’s what happened in March, when high rates helped cause the failure of three U.S. banks and rattled faith in the system.

“Despite today’s deceleration, we continue to expect inflation to remain above the Federal Reserve’s 2% target, making it unlikely that we see policy easing soon,” said Gargi Chaudhuri, head of iShares Investment Strategy, Americas.

That means she expects rates to stay high for a while. That’s also why many investors say the waiting game is still on to see if one of the longest-predicted recessions in memory will actually happen.

In the meantime, though, stocks that tend to benefit the most from lower interest rates are leading the way. That includes big technology and other high-growth stocks.

Microsoft and Nvidia were the two strongest forces pushing up the S&P 500, and each rose at least 1.4%.

Banks gained ground on hopes for a halt to rate hikes. Earlier rate increases strained their business by knocking down the value of loans and bonds bought when rates were ultra low. Following the March collapses of three banks, their stocks tumbled as Wall Street hunted for the industry’s next potential weak link.

Comerica rose 2.5%, and KeyCorp. rose 2.4% for two of today’s bigger gains in the S&P 500.

Domino’s Pizza jumped 10.4% for the biggest gain in the index after it announced a partnership where customers can order its pies through Uber Eats.

In Europe, the Bank of England warned today that households are facing increasing problems from sharply rising interest rates but expressed hope that the country’s biggest banks were resilient enough to offer more help than they could before the global financial crisis 15 years ago.

Stocks in London rose 1.8% and were also higher across much of the rest of Europe.

In Asia, stocks were mixed. Japan’s Nikkei 225 dropped 0.8% after North Korea launched a long-range ballistic missile toward its eastern waters today, two days after the North threatened “shocking” consequences to protest what it called provocative U.S. reconnaissance activity near its territory.

Hong Kong’s Hang Seng index rose 1.1%, South Korea’s Kospi added 0.5% and stocks in Shanghai fell 0.8%.

AP Business Writers Elaine Kurtenbach and Matt Ott contributed.