New York, August 13, 2025 – U.S. stock markets climbed to fresh record levels this week after July’s inflation report came in softer than expected, boosting investor confidence that the Federal Reserve will lower interest rates in September.
Record-Breaking Rally Across Major Indices
The S&P 500 gained about 1.1%, closing at a new all-time high. The Dow Jones Industrial Average also rose roughly 1.1%, while the Nasdaq outperformed with a 1.4% jump, setting its own record. The Russell 2000, which tracks smaller companies, surged 3%, marking its strongest performance among the major indexes.
Global markets mirrored the U.S. rally. Asian benchmarks like the Nikkei, Hang Seng, and Kospi posted solid gains, while European markets advanced earlier in the day. Bond yields fell and the U.S. dollar weakened, reflecting expectations of easier monetary policy.
Softer Inflation and Trade Relief Drive Optimism
July’s headline inflation rate held steady at 2.7%, slightly below forecasts, even though core inflation—driven largely by services—ticked up modestly. The numbers were enough to strengthen expectations that the Fed will shift to a more accommodative stance.
Investor sentiment also benefited from a 90-day extension of the U.S.–China trade truce, which reduced the immediate risk of new tariffs and provided an added boost to global markets.
Eyes on the Federal Reserve
Market analysts now see an almost certain chance of a September rate cut, with speculation growing over whether it will be a quarter-point or a half-point move. Upcoming inflation and jobs reports will be key in determining the size of the adjustment.
Quick Takeaways
- Stocks: All major U.S. indexes hit record highs.
- Inflation: July rate steady at 2.7%, slightly under expectations.
- Global Impact: Gains across Asia and Europe, with a weaker dollar and lower bond yields.
- Outlook: September Fed rate cut viewed as highly likely.
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