Equities Close in on Record High as Fed Cut Trade in Play – US Market Wrap

Wall Street traders speculating that the Fed will lower interest rates drove equities close to all-time highs, hoping that policy easing at a time when the economy is bending but not breaking will boost corporate America.

Following a drop in the wake of weak job numbers, the S&P 500 rebounded as most major tech companies advanced. While future data is expected to reveal that progress in lowering inflation has slowed, traders anticipate nearly three Fed cuts this year. Treasuries saw modest increases, with the two-year yield remaining at its lowest level since 2022. The dollar fell.

Fed officials have indicated that their concerns are moving from tariff-related inflation threats to job market weakness. Steady inflation expectations suggest that tariffs could be a one-time price shock. Even if they take several months to make their way through the economy.

Ahead of next week’s Fed meeting, Thursday’s core consumer price index is expected to rise 0.3% in August for the second consecutive month. Prior to that, the Bureau of Labour Statistics is expected to release another US jobs report on Tuesday, paving the way for a rate cut.