The S&P 500 notched a record close for the second day in a row on Wednesday as investors weighed the prospect of a Federal Reserve rate cut as soon as next month and an ongoing slew of mostly upbeat quarterly earnings.
At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average gained 463 points, or 1%, the S&P 500 index climbed 0.3% to hit fresh record of 6,466.31, and the NASDAQ Composite rose 0.1% to also close a record high.
Fed rate cut expectations rise, but Bullard cools talk of bigger cut Tame consumer price growth has lifted expectations of a rate cut by the Federal Reserve in September, with officials at the central bank seen opting to prioritize supporting a flagging labor market over still above-target price gains.
“Inflation was broadly in line with expectations as tariffs continue to be largely absorbed within U.S. corporate profit margins,” ING analysts said in a note. “This gives the Fed the room to respond to the weaker jobs backdrop and cut interest rates from September,” they added.
Analysts at BCA Research agree that the tepid inflation reading "tips the scales in favor" of a 25-basis point cut at the Fed’s next meeting in September. The ongoing slowing in the jobs picture is likely to also persuade policymakers to roll out one or two further quarter-point drawdowns before the end of the year.
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But expectations for a jumbo cut as much as 50 basis points at the upcoming September meeting were cooled somewhat after potential Fed chair nominee and former Fed president James Bullard downplayed the idea, saying it would signal panic.
Atlanta Fed president Raphael Bostic, meanwhile, continued to lean against a sooner rate cut, saying on Wednesday that the Fed has the luxury to wait as the labor makret remains strong.
Powell’s replacement under consideration The Trump administration is evaluating 11 candidates to replace Federal Reserve Chairman Jerome Powell when his term expires in May, according to CNBC.
The report said three previously undisclosed candidates have been added to the list: Jefferies Chief Market Strategist David Zervos, former Fed Governor Larry Lindsey, and BlackRock’s Rick Rieder, who serves as chief investment officer for global fixed income.
These new names join eight other candidates already under consideration, including Fed Vice Chair for Supervision Michelle Bowman, Fed Governor Chris Waller, and Fed Vice Chair Philip Jefferson.
Additional candidates include Marc Summerlin, who served as an economic advisor in the Bush Administration, Dallas Fed President Lorie Logan, and former St. Louis Fed President James Bullard. National Economic Council Director Kevin Hassett and former Fed Governor Kevin Warsh are also being considered for the position.
Cisco’s earnings in focus On the earnings calendar, Cisco Systems (NASDAQ:CSCO) is set to kick off a string of releases from companies whose reporting quarter finished at the end of July.
