U.S. Stock Markets Reach Record Highs Amid Cooling Inflation

On August 12, 2025, U.S. stock markets closed at record highs, driven by encouraging inflation data that bolstered investor expectations for potential Federal Reserve interest rate cuts. The S&P 500 rose 1.1% to 6,445.76, the Dow Jones Industrial Average increased by 1.1% to 44,458.61, and the Nasdaq Composite gained 1.4% to 21,681.90.

The Russell 2000 Index, representing smaller companies, surged nearly 3% to 2,282.78, reflecting optimism that lower short-term borrowing rates could benefit small-cap stocks.

July's inflation data showed a steady annual rate of 2.7%, slightly below economists' expectations of 2.8%. Core inflation edged up to 3.1%, marginally above forecasts. These figures alleviated concerns that recent tariffs might drive prices higher.

Investors are now pricing in a nearly 94% chance of a rate cut at the Federal Reserve's September meeting, according to the CME's FedWatch Tool.

In after-hours trading, CoreWeave shares fell approximately 10% following a larger-than-expected net loss of $290.5 million in the second quarter, despite reporting revenue of $1.21 billion, surpassing analyst estimates.

The producer price index report on wholesale inflation is scheduled for release on Thursday, ahead of the Federal Reserve's Jackson Hole meeting on August 21-23, which may further influence expectations for the central bank's next policy move.