Stock market today: S&P 500 in record close as Fed cut bets jump on inflation data

Investing.com -- The S&P 500 and Nasdaq notched a record close  Tuesday after consumer prices rose by less than expected in July, increasing the probability of the Federal Reserve cutting interest rates next month.

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average traded 483 points, or 1.1%, higher, the S&P 500 index added 1.1%, and the NASDAQ Composite rose 1.4%, notching a close of 6,445.31 and 21,681.90, respectively.  

Benign CPI data points to September cut

The Bureau of Labor Statistics’ consumer price index, a closely-monitored gauge of inflation, rose by 2.7% in the twelve months to July, data showed on Tuesday. The pace matched that logged in June and was slower than economists’ predictions of 2.8%.

On a month-on-month basis, CPI edged up by 0.2%, in-line with estimates and cooler than 0.3% in June.

However, the "core" CPI, which strips out volatile items like food and fuel, rose 3.1% year-over-year, above the 3.0% expected, and 0.3% on a monthly basis.

Following a weak July jobs report and sharp downward revisions to the readings for June and May, bets have risen to an approximate 90% likelihood that the central bank will slash borrowing costs by 25 basis points at its upcoming gathering in September.

This relatively benign inflation report could partly allay fears that some Federal Reserve policymakers have that U.S. President Donald Trump’s aggressive tariff agenda could drive up inflation.

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"This CPI more than reinforces a 25bp cut from the FOMC in Sept, and if the Aug jobs report (on 9/5) looks anything like the Jul one, a 50bp reduction can’t be ruled out," said analysts at Vital Knowledge, in a note.  

Trump announces BLS head nominee

Investors will also be digesting Trump’s nomination of economist E.J. Antoni as head of the Labor Department’s Bureau of Labor Statistics in the wake of his decison to fire the previous head, Erika McEntarfer, in the wake of the disappointing jobs report at the start of the month. The Senate must still confirm the appointment.

Trump accused McEntarfer, without proving any evidence, of doctoring the figures to damage him politically.

Trump, meanwhile, called on Goldman Sachs CEO David Soloman to fire his economist after the the latter warned that tariffs would raise prices for American consumers.

Perplexity offers $34.5B for Google’s Chrome; Sinclair surges on merger options

Alphabet (NASDAQ:GOOGL) rose more than 1% after AI startup Perplexity AI, which was valued at $18 billion in July, reportedly made a $34.5 billion bid for Google’s Chrome browser. 

Sinclair (NASDAQ:SBGI) shares surged after the U.S. TV station owner said it was reviewing its business for potential mergers or a ventures unit spinoff.

Specialty chemical company Celanese (NYSE:CE) shares tumbled following its warning that it sees “a softening demand environment across most key end-markets in the second half of the year.”

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Tencent Music Entertainment Group (NYSE:TME) stock rose after the company reported better-than-expected results for the second quarter.

Intel Corporation (NASDAQ:INTC) gained 3% after President Donald Trump signaled a positive meeting with Intel CEO Lip-Bu Tan, calling the latter a "success" and saying that he had an "amazing story." The remarks come just days after Trump demanded that intel fire Lip-Bu Tan amid national security worries.

Circle Internet Group Inc (NYSE:CRCL) jumped more than 2% after the stablecoin issue delivered its first quarterly results as a publicly traded company, beating Wall Street estimates on both the top and bottom lines.

Peter Nurse, Ayushman Ojha contributed to this article

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