Stock Market Surges as S&P 500 Nears Record High Amid Bullish Sentiment

US stocks gained on Tuesday following the release of the latest inflation data, with the Dow Jones Industrial Average rising over 500 points and the S&P 500 and Nasdaq Composite edging towards record highs. The S&P 500 broke above 6,400, and investors remain optimistic about a potential Federal Reserve rate cut in September. Tech stocks, particularly those in the artificial intelligence sector, have driven the market's rally.

US stocks gained on Tuesday following the release of the latest inflation data, with the Dow Jones Industrial Average (DJIA) rising over 500 points and the S&P 500 and Nasdaq Composite edging towards record highs. The S&P 500 broke above 6,400, and investors remain optimistic about a potential Federal Reserve rate cut in September. Tech stocks, particularly those in the artificial intelligence sector, have driven the market's rally.

The latest data from the Bureau of Labor Statistics showed that "core" inflation, which excludes volatile food and energy costs, rose 3.1% over the past year in July, ahead of June's 2.9% increase [1]. This indicated that rising goods inflation is no longer being offset by easing services inflation. However, on a headline basis, the Consumer Price Index (CPI) increased 2.7% year over year, matching June and coming in softer than economists' expectations of a 2.8% rise. After the inflation report's release, bets jumped on a Fed rate cut in September, with around 94% of traders expecting this outcome [1].

The report was the first major piece of economic data to be released by the Bureau of Labor Statistics after Trump fired Erika McEntarfer as commissioner earlier this month, following the release of the July jobs report. Late Monday, Trump announced that he nominated E.J. Antoni, chief economist at the conservative Heritage Foundation, to lead the agency [1].

Investors will get two more pulse checks on the state of the economy later this week, with the release of the Producer Price Index on Thursday and retail sales data on Friday. In corporate news, Intel (INTC) stock gained over 1% after CEO Lip-Bu Tan met with Trump, who had called for Tan's resignation just last week. After the meeting, Trump posted to Truth Social calling the meeting "a very interesting one" and hailing the CEO's "success and rise" as "an amazing story" [1].

Wall Street boosted by earnings, Fed rate cut hopes
Wall Street gained on Wednesday, boosted by a string of largely upbeat corporate earnings, while rising expectations of a Federal Reserve interest rate cut provided additional support. At 11:18 a.m. ET, the Dow Jones Industrial Average rose 97.14 points, or 0.22%, to 44,207.51, the S&P 500 advanced 33.76 points, or 0.54%, to 6,332.91 and the Nasdaq Composite was up 151.31 points, or 0.72%, at 21,067.86 [2].

Arista Networks was a standout, soaring 17.5% to an all-time high after the cloud networking company projected current-quarter revenue above estimates. McDonald's was 2.8% higher after the fast-food giant's affordable menu drove global sales past expectations. Global Payments also advanced 5.2% after topping second-quarter profit forecasts, while Match Group, the parent of Tinder, jumped 14.1% after surpassing revenue expectations for the same quarter [2].

Apple jumped 5.2%, providing the biggest boost to the S&P 500 index, as a White House official said the company would announce a $100 billion domestic manufacturing pledge. The stock was on track for its biggest single-day jump in nearly three months [2].

In contrast, Advanced Micro Devices tumbled 7.7% as its data center chip revenue disappointed. Super Micro Computer plunged 20.7% after missing fourth-quarter sales estimates, dragging rival Dell down 2.4% [2].

Markets also found support in rising bets for a September rate cut after last week's jobs report showed slowing employment growth and downward revisions for previous months, suggesting a weakening labor market and lifting expectations of a Fed action to boost the economy. Odds for next month's rate cut stand at 93.2%, compared with just 46.7% last week, according to CME Group's FedWatch tool [2].

References:
[1] https://finance.yahoo.com/news/live/stock-market-today-sp-500-nasdaq-pace-for-record-closes-as-fed-rate-cut-bets-jump-after-cpi-inflation-report-133543310.html
[2] https://www.livemint.com/market/stock-market-news/wall-street-boosted-by-earnings-fed-rate-cut-hopes-11754495911190.html