A lower-than-expected inflation report for May ignited a bullish frenzy on Wall Street, with investors increasing their bets on rate cuts, bolstered by growing confidence that the Federal Reserve will ease its policy stance later this year as price pressures trend towards the 2% target.

The Consumer Price Index (CPI) data revealed cooler-than-anticipated monthly and annual inflation rates for both headline and core items.

This report arrives just ahead of the highly anticipated Federal Open Market Committee (FOMC) meeting, which will commence at 2:00 p.m. ET today.

The implied probability of a rate cut by September has...