S&P 500 Pulls Back From Record High as Investors Weigh Fed Rate Cuts and Earnings
The S&P 500 slipped from fresh record highs on Wednesday as investors weighed the possibility of a Federal Reserve rate cut next month and assessed a wave of quarterly earnings reports.
At 12:46 p.m. ET (16:46 GMT), the Dow Jones Industrial Average was up 312 points or 0.7%. The S&P 500 edged higher by 0.1% after touching a new intraday high of 6,480.28, while the NASDAQ Composite was flat.
Fed Rate Cut Odds Rise, but Bullard Tempers Bigger Cut Speculation
Moderate consumer price growth boosted expectations for a September rate cut, with analysts suggesting the Fed may prioritize supporting a softening labor market over tackling inflation still above its 2% target.
According to ING, tariffs are largely being absorbed by U.S. corporate profit margins, giving the Fed “room to respond” with a rate cut in September. Analysts at BCA Research agreed that slower inflation strengthens the case for a 25-basis-point cut and possibly one or two additional quarter-point reductions by year-end.
However, James Bullard, a potential Fed chair nominee and former Fed president, played down the possibility of a larger 50-basis-point cut, saying such a move could signal panic.
New data on producer prices is due Thursday, followed by retail sales and consumer sentiment figures on Friday.
Trump Administration’s Fed Chair Search Expands
CNBC reported that the Trump administration is considering 11 candidates to replace Fed Chair Jerome Powell when his term expires in May.
Three newly revealed contenders are David Zervos of Jefferies, former Fed Governor Larry Lindsey, and Rick Rieder of BlackRock. They join eight previously known names, including Michelle Bowman, Chris Waller, and Philip Jefferson. Other candidates include Marc Summerlin, Lorie Logan, James Bullard, Kevin Hassett, and Kevin Warsh.
Earnings Spotlight: Cisco Leads Reports
Cisco Systems (NASDAQ: CSCO) is set to report results after the closing bell. Analysts expect an earnings beat, driven in part by strong demand for its firewalls and growing cybersecurity subscriptions. Piper Sandler noted positive momentum in networking, suggesting 2026 could be a strong refresh cycle for the company.
Elsewhere, CAVA (NYSE: CAVA) shares dropped sharply after weaker-than-expected Q2 revenue and slower same-store sales growth. The company also cut its full-year sales forecast.
Kroger (NYSE: KR) stock fell after Amazon (NASDAQ: AMZN) announced a major expansion of its grocery delivery service, raising competitive pressures for supermarkets.
CoreWeave Inc (NASDAQ: CRWV) slumped about 9% after reporting wider-than-expected Q1 losses due to higher costs from meeting surging demand. While revenue beat expectations, CFO Nitin Agrawal said growth remains limited by capacity constraints.
