Dow and S&P 500 close at record highs as investors bet on September rate cut
By Krystal Hur, CNN
New York (CNN) — Stocks surged Tuesday as Wall Street raised its bets that sky-high borrowing rates could come down in the fall.
The Dow surged by 743 points, or 1.9%, closing at a fresh all-time high and notching its best daily percentage gain since June 2023. The S&P 500 gained 0.6%, closing at a record high, and the Nasdaq Composite rose 0.2%.
Investors were feeling buoyant after a round of robust corporate earnings and a better-than-expected consumer spending report. The Commerce Department reported Tuesday that US retail sales were stronger than expected in June, after mostly flat readings for the first half of the year.
The figures are adjusted for seasonal swings but not inflation.
The show of resilience has helped raise optimism that the Fed will begin cutting rates in September. Wall Street now sees a 100% expectation that the Federal Reserve will cut interest rates then, according to the CME FedWatch Tool.
Gold futures settled at a record high of roughly $2462 a troy ounce on Tuesday.
Encouraging inflation data last week had already led investors to raise their bets that the Fed would begin cutting rates in September.
“A September rate cut should be a done deal at this point,” wrote Ron Temple, chief market strategist at Lazard, in a Thursday note.
BNP Paribas economists last Thursday updated their base case to reflect a rate cut in September, citing the mix of June inflation and jobs data. They expect two quarter-point cuts in 2024.
As stocks settle after the trading day, levels might change slightly.
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