Dow jumps over 200 points, Nasdaq hits record after softer July inflation print

Dow jumps over 200 points, Nasdaq hits record after softer July inflation print

US stocks climbed on Tuesday, with the Nasdaq Composite reaching a record high, after a softer-than-expected July inflation reading bolstered hopes for interest rate cuts from the Federal Reserve.

The Dow Jones Industrial Average rose 263 points, or 0.6%, while the S&P 500 gained 0.6%. The Nasdaq advanced 0.8% to a new intraday peak.

The Labor Department said the consumer price index (CPI) rose 0.2% in July from June, matching June’s monthly gain and in line with forecasts. On an annual basis, CPI increased 2.7%, just shy of the 2.8% pace expected. Core CPI — which strips out food and energy — climbed 0.3% month-on-month and 3.1% year-on-year. While the monthly core reading met expectations, the annual figure came in a touch above the 3% forecast.

The report showed price pressures easing in some categories but remaining sticky in others. Shelter costs, which make up more than a third of the CPI basket, continued to rise, though at a slower pace than earlier this year. Prices for used cars, apparel, and household furnishings fell, while energy prices dipped modestly after a jump in June.

The release sent US Treasury yields lower, with the 2-year yield — most sensitive to Fed policy expectations — slipping below 4.30%, and the benchmark 10-year yield down to around 3.93%. The US dollar index weakened to near 103.9, while gold prices edged higher. Rate futures now imply a 91% chance of a September cut, up from 85% before the data, with growing expectations for follow-up cuts in October and December, according to CME FedWatch Tool.

The data helped ease fears that President Donald Trump’s expansive tariff policies would quickly feed into higher consumer prices. Markets are now pricing in a 91% probability of a September rate cut, up from 85% before the release, according to CME FedWatch Tool data. Expectations for additional cuts in October and December also firmed.

The inflation print came just a day after Trump extended a 90-day pause on higher tariffs for Chinese goods, citing progress in negotiations. European markets were also buoyant ahead of Wall Street’s open, with the Stoxx 600 up 0.3% and Germany’s DAX gaining 0.4%.