Stocks closed at three-month highs on Wall Street Wednesday as investors cheered a report showing inflation cooled more than expected in July.

The S&P 500 jumped more than 2% Wednesday on expectations that slower inflation will mean the Federal Reserve won't hike interest rates as much as feared. 

Technology stocks, cryptocurrencies and other investments among the year's biggest losers due to the Fed's aggressive rate hikes led the way. Treasury yields pulled back sharply following the inflation data, as traders pared their bets for how much the Fed will raise interest rates at its meeting next month.

The S&P 500 rose 88 points to close at at 4,210, amid a widespread rally that launched after a report showed the nation's biggest economic challenge, inflation, slowed to 8.5% from 9.1% in June. Technology stocks, cryptocurrencies and others of the year's hardest-hit investments were some of the day's biggest winners.