US stocks advanced on Wednesday as investors maintained expectations for a Federal Reserve rate cut at the next meeting, aided by recent inflation data. The Dow Jones Industrial Average rose more than 1%, adding over 450 points, while the S&P 500 and the Nasdaq Composite finished higher but with smaller gains of around 0.3% and 0.1%, respectively. The Dow stayed within reach of its all-time high last touched in December.
The move followed Tuesday’s rally sparked by the July Consumer Price Index report, which showed inflation rising but at a pace cooler than expected. In a sign of growing easing bets, Treasury Secretary Scott Bessent urged the Fed to start a series of cuts, beginning with a 50 basis-point reduction in September. His comments helped cement trader expectations that a September rate cut is on the table, with some markets predicting a possible jumbo 50 basis-point move.
Investors will receive two more data snapshots later this week: Thursday’s Producer Price Index and Friday’s retail sales data, which will help shape views on the pace of cooling in the economy.
On the corporate front, Circle (CRCL) slid after revealing it would sell 10 million shares following its first earnings report since going public. CAVA (CAVA) also declined after the company trimmed its annual sales growth target. CoreWeave (CRWV) fell sharply as operating income guidance missed expectations and debt costs rose, even though its revenue topped forecasts due to strong AI-related demand.
Additional value and context:
– The market narrative remains centered on the Fed’s path, with inflation cooling and labor conditions showing mixed signals, keeping rate-cut bets in play.
– The coming PPI and retail sales figures will be closely watched for hints about underlying momentum and the durability of any inflation relief.
– If rate cuts materialize as anticipated, they could help support equities and consumer spending by easing funding costs and improving financial conditions.
Positive angle:
– The prospect of stabilizing monetary policy and easier financial conditions could bolster investor confidence and support a continued hunt for pockets of growth, particularly in areas tied to technology and AI-driven demand.
Summary: Investors are positioned for easier monetary policy as inflation cools and data flow ahead of crucial economic indicators keep the probability of a September rate cut intact, even as some stocks react to company-specific news.