The benchmark S&P 500 and the Nasdaq hit record highs Wednesday, underpinned by gains in megacap companies as investors were increasingly confident that the Federal Reserve could restart its monetary policy easing cycle next month.
Signs that U.S. tariffs on imports have not fully filtered into headline consumer prices</ came as a relief for investors this week as they scour for insights on the impact trade uncertainty has had on the economy.
Despite data showing underlying price pressures were on the rise, markets also factored in recent weakness in the job market and a shake-up at the Federal Reserve as they leaned in favor of a potential dovish move by the central bank in September.
Traders are now fully pricing in a 25 basis points interest rate cut, according to the CME's FedWatch Tool, up from 89.2% last week. The central bank last lowered borrowing costs in December.
"We're pretty much certain that we'll have at least 25 basis points of rate cuts in the month of September," said Thomas Hayes, chairman at Great Hill Capital LLC in NY, and noted that the Fed would have to respond to labor market weakness.
At 11:41 a.m. EST, the Dow Jones Industrial Average rose 3335.44 points, or 0.75%, to 44,794.05, the S&P 500 gained 10.61 points, or 0.16%, to 6,456.37 and the Nasdaq Composite gained 26.57 points, or 0.12%, to 21,708.47.
