The latest economic data has put investors in a great mood.
Markets broke through a handful of all-time highs on Thursday as traders cheered August inflation numbers, which affirmed investors’ belief that the Federal Reserve is poised to cut interest rates at next week’s policy meeting.
Major indexes surged to fresh records, with the Dow Jones Industrial Average jumping more than 600 points.
Here’s where US indexes stood at 2:40 p.m. ET on Thursday:
Consumer prices rose 2.9% year-over-year in August, according to the Bureau of Labor Statistics. That reflected a hotter pace of inflation compared to July’s 2.7% increase, but was in line with economists’ expectations for the month.
Jobless claims, meanwhile, also jumped to 263,000 in the last week, above the 236,000 economists expected. That’s the highest weekly number of new applications for unemployment benefits the economy has seen since 2021.
All together, it paints an ideal setup for stocks: The economy is cooling enough to welcome Fed rate cuts, though inflation looks to be contained.
“The last bolt on the gate has fallen out and the rate cutting horse is about to leave the barn,” Chris Zaccarelli, the chief investment offier at Northlight Asset Management, wrote in a note.
“It’s surprising to see how quickly the narrative has shifted from before last week’s jobs report from whether or not there will be a cut in September, to how many cuts we will see after there is definitely a cut in September,” he added.
“August’s CPI print shows inflation is still hanging around,” Gina Bolvin, the president of Bolvin Wealth Management Group, wrote in a note. “The Fed may still cut, but this data argues for a gradual path, not an aggressive pivot.”
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Gold’s gleaming rally
Gold, meanwhile, also clinched a new all-time high as confidence swelled in coming Fed rate cuts. The precious metal climbed as high as $3,687 per ounce, before paring its gains slightly.
The price of bullion is now up 37.6% from levels at the start of the year.
Fed rate cuts are thought to be a bullish catalyst for gold, as the metal is a “non-yielding asset,” meaning lower rates make it more attractive to other investments like bonds. Lower rates also boost the potential for inflation to rise, increasing the appeal of gold as a hedge against weaker buying power. Finally, if the Fed cuts rates in response to economic weakness, that also boosts demand for gold as a safe-haven asset.
“Gold remains 2025’s standout, outperforming most assets on the back of strong central bank purchasing, increased ETF buying, and as the market prices in a more dovish FOMC in the face of elevated and accelerating inflation,” Trevor Yates, a senior investment analyst at Global X ETFs, wrote in a note. “Today’s CPI report further bolstered our bullish gold outlook,” he added.
Get the latest Gold price here.