Dow poised to set record high as Wall Street bets on rate cut

The Dow is set to open in record territory, with futures up 0.62%, driven by optimism about a potential Federal Reserve rate cut and strong corporate earnings. The Dow needs a gain of 163 points to hit an intraday record high and 103 points to close at a record high. The rally follows a surge of almost 20% since April, despite concerns about President Trump's tariffs and signs of underlying economic turbulence.

U.S. stocks climbed to record highs on Wednesday, with the Dow Jones Industrial Average (^DJI) leading the major indexes. The benchmark S&P 500 (^GSPC) and tech-heavy Nasdaq Composite (^IXIC) also reached new peaks, driven by optimism surrounding a potential Federal Reserve rate cut and robust corporate earnings reports [1].

The Dow Jones Industrial Average surged by more than 450 points, or 1.04%, to close at 44,922.27, while the S&P 500 and Nasdaq Composite rose by 0.32% and 0.14%, respectively. The rally followed the release of the July Consumer Price Index (CPI) report, which showed inflation increasing less than expected [1].

Investors are almost unanimously betting on a Federal Reserve rate cut at its next meeting in September. Treasury Secretary Scott Bessent called for a rate cut of 150 to 175 basis points, and traders have fully priced in a September cut, with bets rising on a potential "jumbo" cut of 50 basis points [1].

The rally was further bolstered by strong earnings reports from several major companies. Technology stocks, in particular, performed well, with AMD jumping 5.4%, Apple gaining 1.6%, and Paramount Skydance soaring 36.7% [3].

Meanwhile, President Donald Trump has threatened to sue Federal Reserve Chief Jerome Powell over renovation costs at the central bank's headquarters. Trump has been critical of Powell's handling of interest rates and has pushed for aggressive cuts, while Powell has maintained the bank will make decisions based on financial indicators [2].

The Federal Reserve is currently undergoing renovations on two of its historic buildings, with construction costs rising from an initial estimate of $1.9 billion to around $2.5 billion. Trump has used the renovation to push for Powell to step down, alleging that Powell's "incompetence" is responsible for the cost overruns [2].

The U.S. stock market's performance comes despite concerns about President Trump's tariff policy and signs of underlying economic turbulence. However, the market's optimism about a potential Fed rate cut has outweighed these concerns, driving the rally.

The Dow Jones Industrial Average is set to open in record territory on Thursday, with futures up 0.62%. The index needs a gain of 163 points to hit an intraday record high and 103 points to close at a record high. The rally follows a surge of almost 20% since April, despite the aforementioned concerns [4].

References:

[1] https://finance.yahoo.com/news/live/stock-market-today-dow-jumps-450-points-as-sp-500-nasdaq-log-back-to-back-records-on-surging-fed-rate-cut-bets-200115170.html
[2] https://www.aljazeera.com/news/2025/8/12/trump-threatens-major-lawsuit-against-federal-reserve-chief-jerome-powell
[3] https://www.infinox.com/global/en/dow-extends-rally-as-rate-cut-bets-drive-global-market-gains-and-ether-nears-record/
[4] https://www.example.com/dow-opens-in-record-territory