S&P 500, Nasdaq Hit Record Highs on Soft Inflation Data
Cooler-than-expected producer prices fuel investor hopes for an imminent Federal Reserve interest rate cut, boosting major indices.
U.S. stocks rallied on Wednesday, with the S&P 500 and Nasdaq Composite closing at new all-time highs after surprisingly soft inflation data bolstered investor bets on a forthcoming Federal Reserve interest rate cut.
The market's bullish momentum was ignited by the August Producer Price Index (PPI), which unexpectedly showed a month-over-month decline of -0.1%. This figure stood in stark contrast to the +0.3% increase that economists had forecasted, signaling that inflationary pressures at the wholesale level may be cooling faster than anticipated. immediately shifted market expectations for monetary policy.
Following the report, the probability of the Federal Reserve cutting rates at its September meeting surged to 88%, according to market indicators. The data provides a crucial piece of evidence for Fed officials seeking confirmation that inflation is contained before easing financial conditions. In response, the yield on the 10-year Treasury note slipped, reflecting growing conviction in an imminent policy pivot from the central bank.
The S&P 500 climbed approximately 0.6% to , while the tech-heavy Nasdaq Composite also set a new closing high. The broad-based rally underscored investor enthusiasm for assets that benefit from lower borrowing costs, though the Dow Jones Industrial Average lagged its peers slightly. The positive sentiment marks a significant shift as investors now eagerly await upcoming consumer inflation data for further confirmation of the disinflationary trend.