The Dow surged 617.08 points or 1.4 percent to 46,108.00, the S&P 500 jumped 55.43 points or 0.9 percent to 6,587.47 and the Nasdaq advanced 157.01 points or 0.7 percent to 22,043.07.

Labor Department's report showed U.S. consumer prices rose by slightly more than expected in the month of August. Further, it mentioned that its consumer price index climbed by 0.4 percent in August after inching up by 0.2 percent in July. The report also said the annual rate of consumer price growth accelerated to 2.9 percent in August from 2.7 percent in July, in line with economist estimates. The Labor Department said core consumer prices which exclude food and energy prices, rose by 0.3 percent in August, matching the increase seen in July as well as expectations. The annual rate of core consumer price growth in August was unchanged from the previous month at 3.1 percent, in line with economist estimates.

It also released a report showing first-time claims for U.S. unemployment benefits unexpectedly increased in the week ended September 6th. The report said initial jobless claims climbed to 263,000, an increase of 27,000 from the previous week's revised level of 236,000. With the unexpected increase, jobless claims reached their highest level since hitting 268,000 in the week ended October 23, 2021.

The consumer prices rose slightly faster than expected on a monthly basis, the annual growth in line with estimates along with signs of weakness in the labor market added to recent optimism about the outlook for interest rates. Following the reports, CME Group's FedWatch Tool is currently indicating 94.8 percent chance the Federal Reserve will lower rates by a quarter-point next week and a slim 5.2 percent chance of a half-point rate cut. Computer hardware stocks turned in some of the market's best performances on the day, with the NYSE Arca Computer Hardware Index surging by 2.7 percent to a record closing high.

Networking stocks were substantially strong, as reflected by the 2.7 percent jump by the NYSE Arca Networking Index. The index also reached a new record closing high. Biotechnology stocks significant moved upwards, driving the NYSE Arca Biotechnology Index up by 2.6 percent. Housing, telecom and airline stocks too became considerably strong, moving higher along with most of the other major sectors.

Asia-Pacific stocks turned in a mixed performance. Japan's Nikkei 225 Index jumped by 1.2 percent and China's Shanghai Composite Index surged by 1.7 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent. The major European markets all moved to the upside on the day. While the German DAX Index rose by 0.3 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index both advanced by 0.8 percent.

In the bond market, treasuries moved modestly higher, extending the upward trend seen over the past several sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.1 bps to a five-month closing low of 4.01 percent.

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