U.S. Consumer Price Index (CPI) inflation decelerated beyond predictions in June, impacting the investor outlook on the Federal Reserve's potential policy changes.

By The Numbers: The annual inflation rate in the U.S. dropped from 4% in May to 3% in June, making it the lowest reading since March 2021. The dip is just below the average economist prediction of 3.1%, marking 12 consecutive months of declining inflation.

Key highlights of June's inflation report showed energy prices rising 0.6% after a 3.6% monthly drop in May and core inflation, which excludes volatile food and energy goods, increased 4.8% year-on-year.

The figures come well below May's 5.3% reading and missed the 5% expectation.

Markets reacted strongly to the data.

Trader estimates for the Fed's July meeting are unchanged, with a 0.25% rate hike remaining at a 92% likelihood. Treasury yields sharply declined and S&P 500 (SPY  ) futures rose 1%, with Nasdaq 100 (NDX  ) futures increasing by 1.2%.

A number of stocks reacted in the premarket session, including the following:

Schrodinger Inc (SDGR  ) was up 6.52%. Opendoor Technologies Inc (OPEN  ) gained 5.5%. Redfin Corp (RDFN  ) rose by 5.24%.

PubMatic Inc (PUBM  ), Pagaya Technologies Ltd (PGY  ), and Microvision Inc (MVIS  ) saw gains of 4.44%, 4.29% and 4.15% respectively.

Upstart Holdings Inc (UPST  ) shares gained 4.07%, while ORIC Pharmaceuticals Inc (ORIC  ) and Lilium NV (LILM  ) rose by 3.69% and 3.67%, respectively.

Coherent Corp (COHR  ) also saw a price jump, with a rise of 3.55%.