The consumer price index rose in July, remaining within market expectations, alleviating inflation concerns, and increasing anticipation for a rate cut by the U.S. Federal Reserve (Fed) in September. As a result, the major indices of the New York Stock Exchange surged on the 12th (local time), setting new all-time highs.
The Standard and Poor's (S&P) 500 index closed up 72.31 points (1.13%) at 6,445.76, marking a new closing high. The technology-heavy Nasdaq Composite index also closed at 21,681.90, up 296.50 points (1.39%), setting a new record. The Dow Jones Industrial Average closed up 483.52 points (1.10%) at 44,458.61.
According to the U.S. Department of Labor, the consumer price index (CPI) in July rose by 2.7% compared to the same month last year, maintaining the same level as June. This figure was below the Dow Jones forecast of 2.8%, indicating that the impact of tariffs on prices has not yet become clearly evident.
With stable signals regarding rising prices, the possibility of a rate cut by the Fed in September has also increased. According to the Chicago Mercantile Exchange (CME) FedWatch, the interest rate futures market reflected a 94% probability that the Fed will cut the benchmark rate by 0.25 percentage points at the next monetary policy meeting. This represents an 8 percentage point increase from the previous day.
Investors are paying attention to the possibility that Jerome Powell, the Fed Chair, will hint at a shift in monetary policy at the Jackson Hole conference on the 22nd. The previous day, President Donald Trump signed an executive order extending the 'tariff truce' with China for 90 days, which also supported investor sentiment.
Among individual stocks, Alphabet, Google's parent company, rose 1.2% following news that the artificial intelligence (AI) search engine company, Perplexity, proposed to acquire Google's web browser Chrome for $34.5 billion (approximately 47.8 trillion won).
Catherine Boddema, a senior portfolio manager at Goldman Sachs Asset Management, noted, "The consumer price index figures have generally come out in a way that supports stocks," adding, "Expectations have grown that the Fed's rate cut in September and a rebound in inflation will be temporary."