Traders work on the floor of the New York Stock Exchange on August 11, 2025.<\/p>\n
NYSE<\/p>\n
Both the S&P 500<\/a> and Nasdaq Composite<\/a> closed at fresh record highs on Tuesday after a tamer-than-expected inflation report<\/a> raised the possibility that the Federal Reserve could cut interest rates next month.<\/p>\n The broad-based S&P ended the day up 1.13% at 6,445.76, while the tech-heavy Nasdaq finished up 1.39% at 21,681.90. The Dow Jones Industrial Average<\/a> added 483.52 points, or 1.10%, to close at 44,458.61.<\/p>\n Tuesday’s fresh inflation data release reassured investors, who have feared that President Donald Trump’s broad tariff policies could spike prices in the U.S. economy.<\/p>\n The consumer price index rose 2.7% on an annualized basis in July, while a Dow Jones estimate had called for a 2.8% rise. So-called core CPI, which strips out volatile food and energy prices, increased by 3.1% year on year \u2014 slightly more than the expected 3%.<\/p>\n Expectations for lower rates soared following the report. Traders are now pricing in a 94% chance of a rate cut next month, per trading data from the\u00a0CME’s FedWatch Tool<\/a>. That’s up from a 85% chance before the data release. Traders also increased their bets on rate cuts in October and December.<\/p>\n “It looks like a bit of Goldilocks right now for the stock market,” said Tom Hainlin, national investment strategist at U.S. Bank Asset Management Group. “More and more people are expecting a rate cut in September. So, rates kind of on a downward bias, earnings on an upward bias \u2014 that’s a pretty good environment for the broad stock market.”<\/p>\n Small caps, seen as a big beneficiary of lower short-term borrowing rates, led the rally with the Russell 2000<\/a> up nearly triple the gain in the S&P 500.<\/p>\n