NEW YORK — U.S. stocks climbed Wednesday following a surprisingly encouraging update on inflation and a reassurance that the Federal Reserve still sees a cut to interest rates as likely this year.

The S&P 500 added 0.9% to its all-time high set a day earlier. The Nasdaq composite also built on its own record and jumped 1.5%, while the Dow Jones Industrial Average lagged the market with a dip of 35 points, or 0.1%.

The action was even stronger in the bond market, where Treasury yields dropped after the inflation report showed U.S. consumers paid prices that were 3.3% higher for food, insurance and everything else last month from a year earlier. Economists had been expecting to see the inflation rate stuck at 3.4%.

For Wall Street, a slowdown in inflation not only helps U.S. households struggling to keep up with fast-rising prices, it also opens the door for the Federal Reserve to cut its main interest rate. Such a move would ease pressure on the economy and give a boost to investment prices.

Everything from bitcoin to gold to copper rallied after the inflation data raised expectations for coming cuts to interest rates. A measure of nervousness among investors in U.S. stocks also eased.

For its part, the Federal Reserve kept its main interest rate steady on Wednesday following its latest policy meeting.

Policymakers welcomed the latest update on inflation, but “we’ll need to see more good data to bolster our confidence,” Fed Chair Jerome Powell said. He repeated the Fed’s mantra that it needs an accumulation of data showing inflation is sustainably heading toward its 2% target before it lowers the federal funds rate, which is at the highest level in more than two decades.