US Markets Rise on Fed Rate Cut Expectations: CPI and Corporate Earnings Drive Gains

On Tuesday, US stock markets posted solid gains, supported by fresh inflation data and heightened expectations of a Federal Reserve rate cut. The S&P 500 rose 1.14%, the Dow Jones gained 1.10%, and the Nasdaq 100 advanced 1.33%. Futures for both major indexes continued to climb after the regular session.

The main catalyst was the July Consumer Price Index report. Headline CPI came in at 2.7% year-over-year, slightly below forecasts, while core CPI was 3.1%, a touch above expectations. The release pushed the probability of a Fed rate cut at the September 16–17 meeting up to 94%, compared with 88% the day before.

In the bond market, yields on short-term Treasuries fell on the CPI news, while 10-year yields remained mostly unchanged. Investors also reacted to comments from Donald Trump, who renewed criticism of Fed Chair Jerome Powell and extended the US-China tariff truce by 90 days.

In the corporate sector, strong earnings and company-specific news took the spotlight. United Airlines (+10%) and American Airlines (+12%) rallied on lower oil prices, Hanesbrands (+28%) surged on acquisition rumors involving Gildan Activewear, and Paramount Skydance (+8%) gained after a bullish Guggenheim rating. Among tech giants, Meta led the pack (+3.15%), while the semiconductor sector advanced on strength from NXP Semiconductors, ON Semiconductors, and other chipmakers.

International markets also saw positive sentiment: Japan’s Nikkei hit a fresh all-time high, and China’s Shanghai Composite reached a 10-month peak.

Investors now turn their attention to Friday’s US retail sales data and the Trump-Putin meeting in Alaska, though expectations for a breakthrough remain muted.

Overall, a combination of moderate inflation, robust corporate earnings, and growing anticipation of monetary policy easing has set an optimistic tone across markets.