Stocks Hit Records as Fed Cut Bets Surge – US Market Wrap

Wall Street traders continued to pile into bets that the Federal Reserve would soon cut interest rates, with stocks reaching all-time highs and Treasury yields falling alongside the dollar.

Just a day after a report showing benign inflation data, traders fully priced in a quarter-point Fed cut in September, with some betting on a massive move. While that is not the base case for many strategists, Treasury Secretary Bessent’s remarks that “we could go into a series of rate cuts here, starting with a 50 basis-point rate cut in September” boosted those expectations.

Approximately 420 shares in the S&P 500 rose. While the index only edged higher despite weakness in most megacaps, Apple and Amazon rallied. The Russell 2000 index of small businesses jumped 2%. The Dow Jones Industrial Average rose 1%. Bullish, a cryptocurrency firm, soared during its trading debut. Treasury two-year yields fell five basis points, to 3.68%.

Last month, Fed policymakers maintained their benchmark interest rate target range of 4.25% to 4.5%. Bessent said officials might have cut interest rates if they had known about the revised labour market data released a few days after the most recent meeting.

Trump stated that he may name the next Fed Chair “a little bit early” and that he is down to three or four potential candidates as he searches for a successor to Jerome Powell.

On the geopolitical front, Trump threatened “very severe consequences” if Vladimir Putin did not agree to a cease-fire agreement later this week.