Wall Street Ends at Record Highs as Inflation Data Fuels Rate-Cut Hopes

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•  12 Aug 2025
 

Wall Street closed in the green Monday, with the S&P 500 climbing 1.1% to a fresh record above 6,400 and the Nasdaq up 1.4% also marking a new high. The rally came after U.S. core inflation for July rose 0.3% from June, matching economists’ expectations. The steady inflation trend reinforced bets that the Federal Reserve could begin cutting interest rates as early as September.

Treasury yields moved lower, with the 2-year yield, most sensitive to Fed policy—slipping 4 basis points to 3.73%. The U.S. dollar also weakened. Economists note that a mix of controlled inflation, easing inflation expectations, and labor market softness is giving the Fed room to shift toward rate cuts.

Investor sentiment was further supported by strong earnings and continued optimism in the artificial intelligence sector. Analysts say it would take a major negative inflation surprise or another shock to derail the current bullish momentum.

President Donald Trump renewed criticism of Fed Chair Jerome Powell, even suggesting legal action over budget overruns in the central bank’s headquarters renovation. Meanwhile, Richmond Fed President Tom Barkin noted that economic uncertainty is easing, though the Fed still faces a balancing act between inflation control and job market support.

Nuclear energy company Oklo saw sharp gains after the U.S. Department of Energy selected 11 companies to build experimental reactors by July 2026, aiming to meet surging power demand from AI data centers. In tech, AI startup Perplexity made headlines with a $34.5 billion bid to acquire Google’s Chrome browser following an antitrust ruling.