Stocks and Nasdaq Hit Records as Fed Rate Cut Expectations Boost Rally – US Market Wrap

Wall Street remained calm as an in-line inflation reading fuelled speculation that the Federal Reserve will have room to cut interest rates in September, driving stocks higher and short-term bond yields lower.

All major groups in the S&P 500 increased, with the index rising 1.1% to a record. The Nasdaq 100 also reached an all-time high. The Russell 2000 index of small businesses rose 3%. While the initial rally in Treasuries faded, money markets priced in a roughly 90% chance of a Fed cut next month. Two-year yields, which are more sensitive to upcoming policy changes, fell four basis points to 3.73%. The dollar fell.

Underlying US inflation rose to its highest level since the beginning of the year, but a slow rise in goods prices eased concerns about tariff-driven pressures.

In equities, renewed bets on lower interest rates boosted a rally fuelled by persistent enthusiasm for artificial intelligence and strong corporate earnings.