NEW YORK, Aug 10 —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.

US annual consumer prices slowed to 8.5 per cent in July. Economists polled by Reuters expected the Consumer Price Index to show year-on-year headline inflation of 8.7 per cent, far above the Federal Reserve’s target of 2 per cent, but lower than last month’s 9.1 per cent.

Core inflation remained unchanged month-on-month at 5.9 per cent, while economists were expecting a rise to 6.1 per cent.

The market is now pricing in 33.5 per cent chance of a 75 basis point increase in fund rates at the Fed’s next meeting in September, compared with 67.5 per cent before the data.

At 8:41 a.m. ET, Dow e-minis were up 424 points, or 1.3 per cent, S&P 500 e-minis were up 71.5 points, or 1.73 per cent, and Nasdaq 100 e-minis were up 307.25 points, or 2.36 per cent.

After a rough start to the year, the benchmark S&P 500 is up nearly 13 per cent 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. — Reuters