U.S. stocks ended Wednesday’s session with a mixed performance as fresh inflation data and strong Treasury demand set the stage for the Federal Reserve’s policy meeting next week.

The Dow Jones Industrial Average fell 220.42 points, or 0.48%, to 45,490.9, weighed down by broad declines across industrial and financial shares. The Nasdaq Composite eked out a gain, rising 6.57 points, or 0.03%, to 21,886.1, while the S&P 500 advanced 19.44 points, or 0.30%, to 6,532.05, supported by strength in large-cap growth stocks.

In the bond market, investors showed robust appetite for government debt. This is how Barron's described it. “The Treasury Department sold $39 billion worth of debt expiring in almost 10 years. The highest rate awarded was 4.033%, lower than the average of 4.407% seen in six such prior auctions and 0.013 percentage points lower than the yield seen in pre-bidding deadline for the auction.” Primary dealers took on just 4.2% of the offering, the lowest on record, underscoring broad demand.

The inflation picture provided further support for risk assets. The Producer Price Index (PPI) fell 0.1% in August, following a sharp 0.7% increase in July, the U.S. Bureau of Labor Statistics reported. Services margins drove the decline, while goods prices ticked higher, reflecting easing inflationary pressures in key parts of the economy. On a year-over-year basis, producer prices rose 2.6%.

The softer PPI bolsters expectations that the Fed will proceed with a quarter-point interest rate cut at its meeting next week on September 16 and 17. Futures pricing suggests only about a 10% probability of a larger half-point reduction, with the focus shifting to Chair Jerome Powell’s guidance on the policy path into 2025.

Markets are also bracing for Thursday’s Consumer Price Index (CPI) release, the Fed’s final major input before the decision. Consensus forecasts call for a 0.3% monthly rise in both headline and core CPI, keeping annual headline inflation near 2.9% and core at 3.1%. A cooler print could give policymakers more room to pivot dovish, while a surprise spike could complicate the outlook.

In corporate news, Klarna shares surged on their New York Stock Exchange debut, opening at $52—more than 30% above the IPO price of $40. The Swedish fintech, valued at about $15.1 billion, raised roughly $1.37 billion, highlighting investor appetite for financial technology listings. Klarna closed at $46.33.

With inflation readings easing and strong demand for Treasurys, investors are positioning for a potentially softer Fed stance heading into year-end. But equity markets remain divided, with the Dow lagging even as the S&P 500 and Nasdaq held modest gains.