Market Rally Fueled by Cooling Inflation Data

U.S. equities surged to record highs as softer-than-expected inflation data bolstered expectations for imminent Federal Reserve rate cuts. The S&P 500 closed at an unprecedented 6,445.76, while the Nasdaq Composite ROSE to 21,681.90. The Dow Jones Industrial Average gained 483.52 points, marking a 1.10% increase to settle at 44,458.61.

July's consumer price index showed a 2.7% annual increase, slightly below the 2.8% forecast. Core CPI, excluding volatile food and energy components, rose 3.1% year-over-year. The data prompted traders to increase bets on monetary easing, with market-implied probability of a September rate cut jumping from 85% to 94%.

Small-cap stocks outperformed, with the Russell 2000 advancing nearly triple the S&P 500's gains. In cryptocurrency markets, Circle Internet Group shares climbed 3% following a 53% year-over-year revenue surge in Q2.