Futures tied to the S&P 500 and Nasdaq 100 showed a positive trend early Wednesday, as investors enjoyed a record-setting trading session bolstered by encouraging news regarding inflation. S&P futures climbed 0.2%, while Nasdaq-100 futures also experienced a similar uptick. Meanwhile, Dow Jones Industrial Average futures gained 107 points, or 0.2%, indicating a strong start to the day.
The major U.S. indexes concluded a robust trading session, with both the S&P 500 and the tech-heavy Nasdaq Composite closing at new record highs. The S&P 500 rose by 1.1%, settling at 6,445.76, while the Nasdaq ended the day up 1.4% at 21,681.90. Additionally, the Dow Jones Industrial Average added approximately 483 points, or 1.1%, closing at 44,458.61. Notably, the Russell 2000 Index surged nearly 3% during the session, reflecting the favorable impact of lower short-term borrowing rates on small-cap stocks.
Investor confidence saw a boost on Tuesday, as inflation data came in lower than anticipated, alleviating concerns that tariffs would drive up prices. This positive sentiment led traders to price in a nearly 94% chance of a rate cut at the Federal Reserve's upcoming September meeting, according to trading data from the CME's FedWatch Tool.
Attention now turns to Thursday's report on the producer price index, which will provide further insight into wholesale inflation trends. This report is particularly significant as it precedes the Fed's Jackson Hole meeting scheduled for August 21-23, an event that could influence expectations regarding the central bank's next policy decisions.
Despite the optimistic market performance, not all investors share the same level of confidence. Warren Pies, co-founder of 3Fourteen Research, expressed skepticism about the recent movements in small-cap stocks, suggesting they may not reflect the underlying market conditions accurately. "We’ve had some seasonal buying at the beginning of August," Pies stated on CNBC's Closing Bell. "I think people are starting to jump the gun and misinterpret that as this summer melt-up that everyone wants to believe in. There are concerns regarding the labor market and the growth story, which the market seems to be glossing over."
