U.S. Stocks Rise on Rate Cut Expectations, Airlines Surge 8-11%

The U.S. stock market continued its upward trajectory on Wednesday, August 14, 2025, with major indices closing higher for the second consecutive day [1]. The S&P 500 and Nasdaq both reflected increased investor optimism, fueled by growing expectations of a Federal Reserve rate cut in September [2]. This positive momentum extended to European markets, which reached a two-week high as investors digested earnings reports and economic data [3].

The optimism was underpinned by the July Consumer Price Index (CPI) reading of 2.7% year-over-year, which aligned with market expectations and reinforced confidence in an imminent Fed easing cycle [4]. Liz Ann Sonders, chief investment strategist at Schwab, highlighted that the in-line CPI data supported the likelihood of a September rate cut, which contributed to gains in consumer-oriented sectors like airlines, home builders, and big-box retailers [4].

Investor attention remains firmly fixed on the Federal Reserve’s policy direction. According to the CME FedWatch Tool, there was a 98% probability of a rate cut at the next meeting and over a 50% chance of three cuts before the end of the year [4]. The U.S. dollar weakened as traders positioned for further monetary easing, and Treasury yields declined early on Thursday [4].

In the equity space, major airline stocks such as United Airlines, Delta Air Lines, and American Airlines all rose between 8% and 11%, following the CPI report that showed a reversal in airfare declines after five consecutive months of declines [4]. Other consumer discretionary stocks, including Foot Locker, lululemon, and Nike, also posted gains after U.S.-China trade negotiations were extended for three months [4].

Not all stocks benefited from the broader market upswing. CoreWeave, a data center and cloud services provider, fell nearly 9% despite raising its annual revenue guidance, as the company reported a wider-than-expected loss [4]. Similarly, Cava Group dropped nearly 25% after missing same-store sales expectations and lowering its forecast.

Looking ahead, key data releases will shape the next phase of market sentiment. The July Producer Price Index (PPI) report is expected to provide further clarity on inflation trends, with analysts forecasting headline and core PPI to rise by 0.2% month-over-month [4]. Weekly jobless claims data is also anticipated to offer insight into the labor market's resilience.

The market’s stability was reflected in the S&P 500’s 60-day volatility index, which reached its lowest level since the end of 2024 [4]. While this signals a more tranquil market environment, it also raises concerns about complacency, a historically significant contrarian signal.

Investor positioning expanded beyond U.S. markets, with European equities touching a two-week high as investors balanced strong corporate earnings against mixed macroeconomic signals [3]. The broader optimism was further supported by the performance of global technology firms, with companies like Cisco and Applied Materials drawing attention ahead of upcoming earnings releases [4].

As markets continue to price in Fed easing, investors are closely monitoring upcoming economic data and Federal Reserve communications. Key policymakers from the Richmond, Atlanta, and Chicago Fed are set to speak, offering potential clues on the future path of monetary policy [4].

Source:

[1] Yahoo Finance, [https://finance.yahoo.com/news/stock-market-news-aug-14-060900844.html](https://finance.yahoo.com/news/stock-market-news-aug-14-060900844.html)

[2] CNBC, [https://www.cnbc.com/2025/08/13/stock-market-today-live-updates.html](https://www.cnbc.com/2025/08/13/stock-market-today-live-updates.html)

[3] Reuters, [https://www.reuters.com/markets/europe/european-shares-hit-two-week-high-investors-gauge-earnings-economic-data-2025-08-14/](https://www.reuters.com/markets/europe/european-shares-hit-two-week-high-investors-gauge-earnings-economic-data-2025-08-14/)

[4] Schwab Market Update, [https://www.schwab.com/learn/story/stock-market-update-open](https://www.schwab.com/learn/story/stock-market-update-open)