S&P 500 and Nasdaq Close at Record Highs as Fed Rate Cut Bets Rise
The S&P 500 and Nasdaq Composite closed at record highs on Tuesday after U.S. consumer prices rose less than expected in July, boosting expectations for a Federal Reserve interest rate cut next month.
At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average climbed 483 points, or 1.1%. The S&P 500 gained 1.1%, and the Nasdaq Composite rose 1.4%, ending at 6,445.31 and 21,681.90, respectively.
CPI Data Strengthens Case for September Cut
The Bureau of Labor Statistics reported that the consumer price index (CPI) rose 2.7% in the 12 months to July, matching June’s pace and coming in below economists’ expectations of 2.8%.
On a monthly basis, CPI increased 0.2%, in line with estimates and slower than June’s 0.3% gain.
However, core CPI — which excludes food and energy — rose 3.1% year-over-year, slightly above the 3.0% forecast, and increased 0.3% month-over-month.
Following a weak July jobs report and downward revisions to June and May figures, markets are pricing in a 90% probability of a 25 basis point rate cut at the Fed’s September meeting.
Vital Knowledge analysts said the inflation data “more than reinforces” the case for a cut, adding that if the August jobs report on September 5 mirrors July’s weakness, a 50 basis point reduction “can’t be ruled out.”
Trump Nominates New BLS Head
President Donald Trump nominated economist E.J. Antoni to lead the Bureau of Labor Statistics after firing Erika McEntarfer earlier this month, accusing her — without evidence — of falsifying job figures for political purposes. The appointment still requires Senate confirmation.
Trump also criticized Goldman Sachs CEO David Solomon, urging him to fire his economist after the latter warned tariffs would raise U.S. consumer prices.
Corporate Movers
- Alphabet (NASDAQ: GOOGL) rose over 1% after reports that Perplexity AI, valued at $18 billion in July, made a $34.5 billion bid for Google’s Chrome browser.
- Sinclair (NASDAQ: SBGI) surged after announcing it is reviewing merger options and a potential ventures unit spinoff.
- Celanese (NYSE: CE) tumbled after warning of softer demand across key end markets in the second half of the year.
- Tencent Music Entertainment (NYSE: TME) climbed after reporting better-than-expected Q2 results.
- Intel (NASDAQ: INTC) gained 3% after Trump called his meeting with CEO Lip-Bu Tan a “success,” just days after suggesting the company should fire Tan over security concerns.
- Circle Internet Group (NYSE: CRCL) rose more than 2% after beating Wall Street estimates in its first earnings report as a public company.
