S&P 500, Nasdaq end at record closing highs as moderate inflation lifts rate hopes

S&P 500, Nasdaq end at record closing highs as moderate inflation lifts rate hopes

By Saeed Azhar, Johann M Cherian and Sanchayaita Roy

Tue August 12, 2025 4:29 PM

CPI came in barely changed monthly while annual inflation data even came in a bit lower than estimates. This greatly bolstered confidence that there will be a September rate cut and sent all the indexes straight up. September cut odds now up to a whopping 88.8%. But there are possible consequences of a rate cut at this time. “This is still early innings of this process and just as the Fed will be beginning to cut rates in the autumn, that’s when the inflation data will probably start to be registering some of these more direct tariff price increases and it’s going to complicate the rate-cutting decision.” 

It’s been a long-time consensus of most economists that the only thing worse than not cutting rates is cutting rates and then inflation going back up, something that would be very hard to control once it starts. But the hopes of a rate cut is what made last week’s rally the largest in two years. At 16.4 billion, volume remains considerably below the 18.3 average.  

DJ: 43,975.09  -200.52       NAS: 21,385.40  -64.62      S&P: 6,373.45  -16.00        8/11

DJ: 44,458.61  +483.52      NAS: 21,681.90  +296.50    S&P: 6,445.76  +72.31       8/12

Tue 8-12-25 4:29 pm S&P 500, Nasdaq end at record closing highs as moderate inflation lifts rate hopes | Reuters