Wall Street stocks gained ground as softening inflation data and a strong start to the second-quarter earnings season put investors in a buying mood.

All three major stock indexes closed modestly higher despite weakness in semiconductors, with consumer-focused retail and travel/leisure the clear outperformers.

Sources told Reuters that Stripe and private equity firm Advent International have jointly offered to acquire it for $60.50 per share – representing a nearly 28% premium to PayPal’s close on Tuesday.

Another day of solid bank earnings added momentum to a good start to the second-quarter reporting season. BlackRock and Morgan Stanley both beat expectations for quarterly profits.

Everything looks good with the bank’s earnings, said Mike Dixon, head of portfolio management at Horizon Investments in Charlotte, North Carolina. “I wouldn’t be at all surprised to see another bang-out quarter.”

According to the most recent data from LSEG, analysts currently expect S&P 500 earnings to grow 23.7% on a year-over-year basis in the second-quarter.

According to preliminary data, the S&P 500 rose 29.00 points, or 0.38%, to close at 7,572.59 points, while the Nasdaq Composite added 161.87 points, or 0.62%, to 26,268.88. The Dow Jones Industrial Average rose 155.53 points, or 0.30%, to 52,663.80.

Cooling Inflation, Warsh Testimony Continues

The Labor Department’s Producer Price Index (PPI) report delivered a second straight day of cooler-than-expected inflation data, as newly confirmed US Federal Reserve Chair Kevin Warsh appeared before the Senate Banking Committee on his second day of congressional testimony.

Combined with Tuesday’s CPI report, the PPI data suggested inflation took a step in the right direction last month, although it remains elevated due to the US-Israeli war over Iran. This eased near-term pressure on the central bank to raise its key interest rate.

“My fear going into this week was that we might get a hot CPI print, inflation above 3.8%, and we didn’t get that; we got a cool reading of 3.5%,” said Lauren Cassidy, chief investment officer of the Founders 100 ETF in Dallas. “So the Federal Reserve has an opportunity to keep rates flat or cut them later this year, which is good news for the market.”

According to CME’s FedWatch tool, financial markets are currently pricing in a 10.2% probability that the Fed will implement a 25 basis point rate hike at the conclusion of this month’s monetary policy meeting, up from 31.0% a week ago.

Still, this week’s inflation data focused on last month, as investors grew optimistic that negotiators were moving toward a peaceful solution to the Middle East conflict. That optimism has faded in recent days as the US and Iran have been waging airstrikes to regain control of the Strait of Hormuz. Due to which price pressure may increase.

Fed Governor Lisa Cook said she was “ready to act” if inflation did not begin to slow soon.