S&P 500 and Nasdaq Hit Record Highs Driven by Fed Rate Cut Expectations

According to ChainCatcher, market sources report that Wall Street remained calm as inflation data met expectations, intensifying speculation about a Federal Reserve rate cut in September, which pushed stocks higher and short-term bond yields lower.

All major sectors of the S&P 500 rose, with the index climbing 1.1% to a record high. The Nasdaq 100 also reached an all-time high. The Russell 2000 small-cap index gained 3%. Although the initial rally in Treasuries lost some momentum, money markets are now pricing in about a 90% chance of a Fed rate cut next month. The yield on the two-year Treasury note, which is more sensitive to upcoming policy changes, fell by 4 basis points to 3.73%.

The US dollar declined. While core inflation in the US rose to its highest level since the start of the year, the slow increase in goods prices eased concerns about tariff-driven pressures. In the stock market, renewed bets on lower interest rates fueled a rally supported by ongoing enthusiasm for artificial intelligence and strong corporate earnings.