S&P 500 Advances Amid September Fed Rate-Cut Hopes, Trump-Putin Summit

The S&P 500 advanced for the week as the likelihood of a September Fed rate-cut kept bulls engaged. The US equity market ended mixed, with the Dow briefly hitting a record high due to UnitedHealth's gains and optimism about Fed rate cuts and trade deals. However, Applied Materials' shares sank on weak China demand and tariff uncertainty.

The S&P 500 advanced for the week, buoyed by the increasing likelihood of a September Federal Reserve (Fed) rate cut. The U.S. equity market ended mixed, with the Dow Jones Industrial Average briefly hitting a record high due to gains from UnitedHealth Group and optimism surrounding potential Fed rate cuts and trade deals. However, Applied Materials Inc. (AMAT) saw its shares sink as it faced weak demand from China and uncertainty related to tariffs.

Pre-market futures were up this morning, following fresh all-time closing highs from the S&P 500 and Nasdaq on Tuesday [1]. The rate-cut narrative continues to feed market optimism, as overnight the U.S. Treasury Secretary Scott Bessent suggested the Federal Open Market Committee (FOMC), which next meets September 16-17, should cut the Fed funds rate by 50 basis points (bps) instead of the earlier considered 25 bps. This would bring interest rates down to 3.75-4.00%, a level last seen in December 2022 [1].

The July Inflation Rate came in at +2.7%, assuaging fears that tariffs have reignited inflation in the present economy [1]. However, the question remains whether interest rates coming down while tariffs begin to heat up inflation could lead to a fresh unprotected rise in inflation for 2026 and beyond.

In the earnings front, Brinker International Inc. (EAT), the parent company of restaurant chains such as Chili’s and Maggiano’s, outperformed expectations in its fiscal Q4 report. Earnings of $2.49 per share surpassed the Zacks consensus $2.43, and revenues of $1.46 billion beat estimates by +2% [1]. Shares are up +6.5% in today’s pre-market, adding to the +17% the stock has made year to date.

Cisco Systems Inc. (CSCO) is also expected to report earnings after the closing bell, with shares up +20% year to date and expected to bring +11.5% earnings growth year over year [1]. The company is known for rarely missing earnings projections.

U.S. equity funds gained substantial inflows in the week through August 13, with investors reversing a selling stance on hopes of a potential Fed rate cut in September and a U.S.-China tariff truce further lifting sentiment [2]. Investors bought a net $8.77 billion worth of U.S. equity funds during the week, partially offsetting the $13.89 billion in outflows recorded the previous week.

Despite the overall market optimism, Applied Materials Inc. (AMAT) reported weak guidance due to macroeconomic pressures and trade issues. The company cited weakness from leading edge customers and said China clients are easing spending after a period of rapid manufacturing [3]. The company forecasted adjusted earnings of $2.11 per share for the quarter, falling short of the $2.39 per share expected by LSEG, and projected $6.7 billion in revenue, versus the $7.34 billion estimate. The company's shares plunged more than 13% after the announcement.

The upcoming Producer Price Index (PPI) report for July is projected to warm up to +0.2% on headline and +0.3% on core (minus food and energy costs) from 0.0% a month ago [1]. This data may provide insights into the potential effects of tariffs on wholesale prices before they manifest in retail prices.

In summary, the S&P 500 advanced for the week on the back of rate-cut hopes, while Applied Materials Inc. suffered due to weak China demand and tariff uncertainty. Investors remain cautiously optimistic about the market's prospects in the coming months.

References:
[1] https://www.nasdaq.com/articles/expectations-september-rate-cut-soar
[2] https://www.reuters.com/business/us-equity-funds-draw-weekly-inflows-rate-cut-hopes-2025-08-15/
[3] https://www.cnbc.com/2025/08/15/applied-materials-stock-china-demand-earnings.html