After a slowdown in inflation fueled speculation that the Federal Reserve would pause its tightening campaign on Wednesday, Wall Street received some encouragement to send stocks higher.

That's not to say investors believe the Fed will stop raising interest rates anytime soon. While swap traders believe the chances of a June increase are only 10%, they believe a July move is possible. Even if it remains on hold this week, the central bank will continue to sound hawkish to some of the world's largest money managers.

Short-term Treasury yields have risen to their highest level since March, as expectations that the Fed will cut interest rates this year have declined. Two-year interest rates, which are more sensitive to upcoming policy changes, rose 10 basis points to 4.68%.

The S&P 500 rose for the fourth day in a row, its longest winning streak since early April, and approached the 4,400 mark. The Cboe Volatility Index, Wall Street's "fear gauge," fell back below 15. This compares to a VIX average of 23 over the last year.