S&P 500 Hits Record High as Inflation Data Fuels Rate Cut Bets

The S&P 500 surged past 6,400 for the first time in history, propelled by a broad market rally following softer-than-expected CPI data. The Dow Jones Industrial Average climbed 1.1%, while the Nasdaq Composite ROSE 1.4%, both closing at record levels. Small-cap stocks outperformed, with the Russell 2000 jumping 3% on heightened expectations of Federal Reserve easing.

Core inflation edged up to 3.1% annually in July, signaling persistent price pressures in goods sectors. However, headline CPI held steady at 2.7%, coming in below forecasts. Market participants now price a 94% probability of a September rate cut, according to CME Group data.

The inflation report marks the first major economic release since the TRUMP administration's abrupt dismissal of BLS commissioner Erika McEntarfer. Policy uncertainty lingers as the White House prepares to nominate a replacement during this sensitive market period.