S&P 500 Reaches Record High as Softer Inflation Data Lifts Rate Cut Expectations

U.S. stocks rallied on Wednesday, with the S&P 500 closing at a fresh all-time high after inflation data came in softer than expected, strengthening hopes that the Federal Reserve will continue easing policy. The benchmark index rose 0.9% to 5,854, extending its recent gains as investors welcomed signs that price pressures may be moderating.

The Nasdaq Composite also advanced 0.9% to 18,521, supported by broad strength in technology shares, while the Dow Jones Industrial Average added 0.6% as traders rotated into equities on improving sentiment. The latest consumer price index report suggested inflation is cooling enough to give policymakers more room to cut interest rates in the months ahead.

Markets have been closely watching economic data for clues about the Fed’s next move, and the softer CPI reading reinforced expectations that the central bank may maintain a more accommodative stance. Lower borrowing costs would likely support corporate earnings and valuations, especially in rate-sensitive sectors.

The rally reflected renewed confidence that the economy can avoid a sharp slowdown while inflation continues to ease. Investors now appear increasingly focused on the timing and pace of future Fed cuts, with the latest data offering another boost to risk appetite across Wall Street.