S&P 500 and Nasdaq Hit Records on Fed Rate-Cut Bets

The S&P 500 and Nasdaq Composite reached record highs on Tuesday as investors priced in the likelihood of a Federal Reserve rate cut in September, driven by a more moderate-than-expected July inflation report [2]. The S&P 500 closed up 1.13% at 6,445.76, while the Nasdaq Composite advanced 1.39% to 21,681.90. The Russell 2000 Small-Cap Index also saw a strong performance, rising nearly 2.7% as the broader market anticipated cheaper borrowing costs and improved access to capital for smaller firms [2].

The CPI report showed a year-over-year increase of 2.7%, below the 2.8% forecast, while core CPI rose 3.1%, slightly above expectations [2]. This data fueled optimism that the Fed might begin reducing interest rates, with traders now pricing in a 94% probability of a cut in September, up from 85% before the CPI data [2]. The two-year Treasury yield, a key indicator of market expectations for monetary policy, fell 4 basis points to 3.73% [1].

President Donald Trump’s 90-day extension on higher tariffs on Chinese goods further contributed to the market’s positive sentiment, reducing concerns over potential trade-related inflationary pressures [2]. Analysts highlighted the favorable economic backdrop, noting that corporate earnings have been on an upward trajectory and that interest rates are trending lower, creating conditions that support equity markets [2].

The stock rally was broad-based, with more than 20 S&P 500 components hitting 52-week highs. Notable performers included Meta Platforms, BlackRock, and Morgan Stanley. The VanEck Semiconductor ETF also reached an all-time high, supported by strong gains in firms like ON Semiconductor and Microchip Technology [2].

Despite the overall strength, some stocks in the S&P 500 fell to 52-week lows, particularly in the consumer goods, financial, and technology sectors. Celanese, a specialty chemical company, dropped 15% after issuing a weaker-than-expected earnings forecast, signaling potential demand weakness [2].

Global markets showed mixed performance, with the Hang Seng Index in China Hong Kong and the CSI 300 in China both posting modest gains, while the Kospi in South Korea declined. The contrast underscored the global focus on U.S. monetary policy and its influence on investor risk appetite [2].

Analysts remain divided on the pace of rate cuts. While some, like BCA Research, see a gradual slowdown in economic growth as a positive sign that could accelerate Fed easing, others, including UBS, highlight persistent inflation and expect a slower and more measured reduction in interest rates through the end of the year [2][7].

The U.S. dollar weakened on Tuesday amid the rate-cut speculation, and the market appears to be prioritizing long-term rate expectations over near-term economic concerns [1]. The next key data points—producer price inflation and the Federal Reserve’s Jackson Hole symposium—will likely provide further direction on the central bank’s policy path [2].

For now, equity markets remain elevated, reflecting a consensus that lower rates are on the horizon and that corporate earnings continue to hold up despite a broader economic slowdown [2].

Source:

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[2] title2.............................(https://www.cnbc.com/2025/08/11/stock-market-today-live-updates-.html)

[3] title3.............................(https://www.reuters.com/business/sp-500-nasdaq-record-highs-inflation-rises-moderately-july-2025-08-12/)

[4] title4.............................(https://www.bloomberg.com/news/articles/2025-08-11/stock-market-today-dow-s-p-live-updates)

[5] title5.............................(https://www.wsj.com/finance/stocks/dow-climbs-more-than-400-points-nearing-all-time-highs-1cdce0fa?gaa_at=eafs&gaa_n=ASWzDAgj48tXvPxbp35oZFwY6CgFhovWaaXWTAxe2X-ANXbKWmrbyORqN9E1&gaa_sig=MKTcX4tHbXvaeXstFvKcs90Jmq1njqA8RjagaLrIBWln2uP-wasA7GH9xxRglngihJoIyRPOgg-2pL9eUY-pGA%3D%3D&gaa_ts=689bab31)

[6] title6.............................(https://www.binance.com/en/square/post/28231486800953)

[7] title7.............................(https://www.theglobeandmail.com/investing/markets/indices/IQY/pressreleases/34062656/wall-street-rises-to-more-records-on-hopes-for-lower-interest-rates/)

[8] title8.............................(https://www.swissinfo.ch/eng/s%26p-500-hits-record-as-cpi-fuels-bets-fed-will-cut%3A-markets-wrap/89817940)

[9] title9.............................(https://www.marketwatch.com/livecoverage/stock-market-today-dow-s-p-500-and-nasdaq-set-for-tepid-rise-as-cpi-report-looms-intel-shares-climb/card/stocks-are-trading-at-record-highs-here-are-the-levels-to-watch--U0O8cpFVvmBTM81xdzSu)

[10] title10...........................(http://markets.chroniclejournal.com/chroniclejournal/article/marketminute-2025-8-12-wall-street-soars-hopes-for-fed-rate-cuts-and-trade-truce-drive-market-towards-records)