Sign in Subscribe
Stock prices

US Stock Markets Rise Amid Steady Inflation, Fueling Hopes for Interest Rate Cut

Strategic Insights

— 2 min read

US stock markets reached new highs on Wednesday, building on the previous day's records, as steady inflation data eased concerns about interest rates. The S&P 500 index and the tech-heavy Nasdaq extended their gains, with both indices finishing at fresh records. The Tokyo Nikkei index also hit a record high, closing 1.3 percent higher. European stock markets finished in the green, with investors shrugging off worries about the impact of US President Donald Trump's tariffs on inflation and growth. Official figures showed that the US consumer price index remained steady at 2.7 percent in July, unchanged from June, and core CPI accelerated to 3.1 percent, the fastest pace in six months. Markets reacted positively to the data, with investors increasing expectations for a September interest rate cut, as they believe imported goods inflation remained lower than feared.

Key Takeaways:

  • The S&P 500 index and the tech-heavy Nasdaq reached fresh records on Wednesday, extending their gains from the previous day.
  • The Tokyo Nikkei index also hit a record high, closing 1.3 percent higher on Wednesday.
  • European stock markets finished in the green, with investors broadly optimistic about the prospects for interest rates.
  • The US consumer price index remained steady at 2.7 percent in July, unchanged from June, easing concerns about inflation.
  • Core CPI accelerated to 3.1 percent in July, the fastest pace in six months, but markets reacted positively to the data.
  • Investors increased expectations for a September interest rate cut, believing that imported goods inflation remained lower than feared.
  • Deutsche Bank analysts noted that even as core CPI was accelerating, markets were reassured because the tariff impact on inflation didn't look so obvious this time.
  • Swissquote Bank senior analyst Ipek Ozkardeskaya said that markets could have reacted negatively as core inflation is usually the data point favored by the Fed to make decisions on interest rates.

Statistics:

  • The S&P 500 index rose to a fresh record high on Wednesday.
  • The Nasdaq also reached a new record high, with the tech-heavy index extending its gains from the previous day.
  • The Tokyo Nikkei index closed 1.3 percent higher on Wednesday, hitting a record high.
  • The US consumer price index remained steady at 2.7 percent in July.
  • Core CPI accelerated to 3.1 percent in July, the fastest pace in six months.
  • The dollar slumped against other major currencies as the prospect of lower interest rates reduced its appeal to foreign investors.
  • The International Energy Agency raised its forecast for supply growth in 2025 and 2026, leaving the world with a surplus.

Sources:

  • Deutsche Bank analysts
  • Ipek Ozkardeskaya, senior analyst at Swissquote Bank
  • The International Energy Agency
  • US Federal Reserve
  • Bloomberg
  • CNBC

Read more