S&P 500 and Nasdaq Renew All-Time Highs
US inflation remains at 2,7% per year
Market projects Fed interest rate cut in September
The S&P 500 closed Tuesday's trading session above the 6.400-point mark for the first time, following a session marked by significant gains across the major indexes. The Dow Jones Industrial Average rose about 500 points, equivalent to 1,1%, while the tech-heavy Nasdaq climbed approximately 1,4%. This brought both the S&P 500 and Nasdaq to record closing highs.
The Russell 2000 index, which tracks smaller-cap companies, also saw strong gains, rising nearly 3%. The move was fueled by investor confidence in a possible Federal Reserve rate cut later this year.
In this article, we will discuss:
Core inflation rises, maintaining pressure on the Fed
Change of command and economic agenda of the week
Core inflation rises, maintaining pressure on the Fed
According to the Bureau of Labor Statistics, core inflation—which excludes volatile items like energy and food—rose 3,1% year-on-year in July, surpassing the 2,9% increase seen the previous month. Meanwhile, the Consumer Price Index (CPI) rose 2,7% year-on-year, matching June's rate and below the market projection of 2,8%.
As a result, around 94% of traders, according to the CME Group, now estimate that the Fed will announce an interest rate cut in September, a move that, in the market's view, could sustain appetite for risk assets.
Change of command and economic agenda of the week
The inflation report was the first released after the agency's leadership change. Current U.S. President Donald Trump fired Commissioner Erika McEntarfer earlier this month and appointed EJ Antoni, chief economist at the Heritage Foundation, to the position.
In the coming days, the market will be monitoring the release of new economic data, including the Producer Price Index on Thursday and the retail sales report on Friday.
