US equity markets advanced for a second consecutive session on Wednesday after the Department of Labor reported that the producer price index fell 0.3 per cent in June from the previous month, below consensus forecasts. The core PPI, which excludes food and energy, rose 4.7 per cent year-on-year, also undershooting estimates. The data, following a cooler consumer price index reading a day earlier, prompted traders to slash bets on a near-term Federal Reserve rate increase. According to CME Group’s FedWatch tool, the probability of a quarter-point hike at the July policy meeting dropped to around 10 per cent, down from 42 per cent before the CPI release. The yield on the benchmark 10-year Treasury note slipped to 4.55 per cent, while the S&P 500 closed 0.38 per cent higher and the Nasdaq Composite gained 0.62 per cent.

The session’s most dramatic move came from PayPal Holdings, whose shares jumped more than 16 per cent after Reuters reported that payments rival Stripe and private equity firm Advent International had submitted a joint buyout offer valuing the company at $53 billion, or $60.50 per share. The proposal represents a 28 per cent premium to PayPal’s previous close and is backed by roughly $50 billion in committed bank financing. PayPal, which has seen its market value erode from a 2021 peak of about $360 billion to as low as $36 billion this year amid intensifying competition from Apple Pay and Google Pay, has not yet responded to the approach. Stripe and Advent intend to own the company jointly without breaking it up, according to people familiar with the matter. A combination would create a payments giant processing an estimated $3.7 trillion in annual volume, equivalent to roughly 3 per cent of global GDP.

The inflation readings and deal activity overshadowed, but did not extinguish, concerns over the conflict between the United States and Iran. Brent crude briefly rose above $86 a barrel before retreating to $83.37, as Iran’s Islamic Revolutionary Guard Corps warned it could close “all other export corridors that benefit the U.S. and its allies” after shutting the Strait of Hormuz. In Washington, Federal Reserve Chair Kevin Warsh, testifying before the Senate Banking Committee for a second day, said that a one-time price shift driven by artificial intelligence infrastructure was not necessarily inflationary, distinguishing it from a supply-reducing foreign conflict. He cautioned, however, that a single data point was insufficient to declare victory over inflation. New York Fed President John Williams separately noted “encouraging signs” that inflation had peaked.

The second-quarter earnings season also lent support, with BlackRock and Morgan Stanley both beating profit expectations, following strong results from major banks a day earlier. Analysts now project S&P 500 earnings growth of 23.7 per cent year-on-year, according to LSEG data. The next milestones for investors are the conclusion of Warsh’s congressional testimony and any signal from PayPal’s board on whether it will engage with the Stripe-Advent consortium.