The three major indices on the New York Stock Exchange continue to trend upward. The results of the July U.S. Consumer Price Index (CPI) and expectations for interest rate cuts seem to have stimulated investor sentiment.
As of 10:05 a.m. local time on the 13th, the Dow Jones Industrial Average rose by 423.91 points (0.95%) to 44,882.52 on the New York Stock Exchange. The Standard & Poor's (S&P) 500 Index increased by 25.33 points (0.39%) to 6,471.09, while the Nasdaq Composite Index climbed by 69.26 points (0.32%) to 21,751.16.
While the market awaits the July U.S. Producer Price Index (PPI) to be announced on the 14th, it appears that the growing expectations for a rate cut in September after the July CPI announcement have influenced these figures.
In July, the CPI rose by 2.7% compared to the same month last year, maintaining the same level as June. This is slightly below the market expectation of 2.8%. Compared to the previous month, it increased by 0.2%.
According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the federal funds rate futures market reflects a 99.9% probability that the benchmark rate will be cut by 25 basis points in September. This is an increase from 93.9% at the end of the previous day.
The probability of the benchmark rate being reduced by 75 basis points by December also rose from 50.3% to 55.7%.
The pressure from U.S. government officials on the Federal Reserve (Fed) to continue reducing interest rates has contributed to this atmosphere. Scott Bessent, the U.S. Secretary of the Treasury, noted in an interview with foreign media that he believes a series of rate cuts could begin with a 50 basis points cut (big cut) from September.
Bessent said that the big cut is "a signal that adjustment is needed and that interest rates are excessively restrictive," adding, "The model suggests rates should be lowered by 150 to 175 basis points."
However, there are voices in the market cautioning against excessive increases. Warren Pies, co-founder of 3Fortin Research, said, "There is some concern about the labor market and growth outlook, and it seems the market is overlooking this."
By sector, all sectors except utilities, industrials, and consumer staples are strong. The large technology companies with market capitalizations of over $1 trillion are trading sideways. Amazon and Tesla are up more than 1%.
European stock markets are also showing strong gains. The Euro Stoxx 50 Index rose by 1.05% compared to the previous close. The French CAC 40 Index increased by 0.71%, and the German DAX Index rose by 0.76%. The UK's FTSE Index is maintaining moderate gains.
International oil prices are experiencing significant declines. As of 9:40 a.m. today, the price of West Texas Intermediate (WTI) crude oil for September delivery was trading at $62.78 per barrel, down 0.62% from the previous close.