U.S. stock markets experienced a volatile session that delivered new historic highs amid growing hopes for an interest rate cut. This was driven by economic data that surprised investors and fueled optimism on Wall Street.

Wall Street Sets New Records on Rate-Cut Hopes

U.S. stock markets

By the close of Wednesday’s session, U.S. stock indices were mixed, but the S&P 500 and the Nasdaq Composite managed to notch fresh record highs despite pressure on some major stocks.
The S&P 500 rose 0.30% to close at 6,532.04 after touching an intraday record of 6,555.97 before trimming gains late in the session. The Nasdaq Composite edged up 0.03%, ending the day at 21,886.06 after hitting a historic level earlier in the day.

In contrast, the Dow Jones Industrial Average fell 220.42 points, or 0.48%, to settle at 45,490.92. This was weighed down by a drop in Apple shares following the announcement of its latest iPhone release, which disappointed investors.

Inflation Data Fuels Rate-Cut Expectations

U.S. stock markets

Surprising economic data ignited optimism that the Federal Reserve may soon step in to lower interest rates, directly boosting market sentiment.

Although much of the market’s early gains faded in the final trading hours, shares of Oracle and other technology companies tied to artificial intelligence continued to post substantial advances. Even so, decliners outnumbered gainers in the S&P 500.

The early rally was primarily supported by August producer price data, which showed a 0.1% drop in wholesale prices, while expectations had pointed to a 0.3% increase. The core index—excluding food and energy—also fell 0.1%, defying forecasts for a similar rise.

These figures arrive just before Thursday’s release of the Consumer Price Index (CPI), which investors consider a more important gauge of inflation trends. Economists surveyed by Dow Jones expect a monthly increase of 0.3% in the headline and core CPI, which could lift the annual inflation rate to 2.9% while keeping core inflation steady at 3.1%.

Investors believe that slowing wholesale inflation strengthens the chances that the Federal Reserve will cut rates next week, a move aimed at supporting the economy and financial markets.

In summary, as Wall Street’s benchmarks continue to test new highs on the back of rate-cut expectations and an unexpected inflation slowdown, the U.S. economic outlook remains under close watch. The upcoming CPI report is likely to shape the Fed’s next monetary policy decision.

U.S. stock markets

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