Expectations for Rate Cuts Grow... S&P 500, Nasdaq Reach Record Highs [New York Stock Market Briefing]

Expectations are rising that the Fed will cut the benchmark interest rate in September. This is because the July consumer price index (CPI) rose as expected. Major indices on the New York Stock Exchange also hit record highs.

On the 12th (local time), the Dow Jones Industrial Average closed at 44,458.61, up 483.52 points (1.1%) from the previous session. The S&P 500 rose 72.31 points (1.13%) to 6,445.76, and the Nasdaq index rose 296.5 points (1.39%) to close at 21,681.9.

The S&P 500 and Nasdaq indices hit all-time closing highs that day. Investor sentiment improved as the July CPI increase met expectations. The U.S. Department of Labor announced that the July CPI in the U.S. rose 2.7% year-on-year. This is the same as in June (2.7%) and below the expert forecast (2.8% increase) compiled by Dow Jones.

Expectations for a rate cut also grew. According to CME's FedWatch, the interest rate futures market reflected a 94% probability on this day that the Fed would lower the benchmark rate by 0.25% points at the September Federal Open Market Committee (FOMC) meeting. This is 8 percentage points higher than the previous day.

The extension of the tariff truce with China also appears to have positively affected investor sentiment. U.S. President Donald Trump signed an executive order extending the 'tariff truce' for another 90 days on the last day of the initial 90-day period, as reported by CNBC and Reuters.

Major tech stocks rose across the board. Meta climbed 3.15%, while Microsoft (1.4%), Alphabet (1.25%), Apple (1.09%), NVIDIA (0.55%), and Tesla (0.53%) were also strong. Intel surged 5.46% after news broke that CEO Lip-Bu Tan, who has been under pressure to resign, visited the White House to meet President Trump that day.

Stablecoin issuer Circle rose 1.27% after announcing strong second quarter results. However, news that the company is moving to issue 10 million additional shares caused shares to fall by more than 5% in after-hours trading.

Jin Young-gi, Hankyung.com reporter young71@hankyung.com