Major U.S. stock indexes ascended to unprecedented highs on August 13, 2025, fueled by increasing expectations of a Federal Reserve interest rate reduction in September. The S&P 500 closed at a new record of 6,466.58, up 0.3%, while the Nasdaq Composite also set a fresh milestone, climbing 0.1% to 21,713.14. The Dow Jones Industrial Average demonstrated significant strength, surging 1% to conclude the trading day at 44,922.27, narrowly missing its own record. The market's upward trajectory was significantly influenced by the release of July's inflation data, which showed the Consumer Price Index (CPI) increasing by 2.7% year-over-year, a figure that remained steady with the previous month but was slightly below economists' projections. This moderation in headline inflation offered a sense of relief, suggesting that previous monetary tightening measures might be taking hold. However, the core CPI, which excludes volatile food and energy prices, rose by 3.1% year-over-year, the highest in six months, indicating persistent underlying inflationary pressures. This mixed inflation picture has intensified investor focus on the Federal Reserve's upcoming September meeting, with market participants increasingly pricing in a rate cut. The CME FedWatch Tool suggests a high likelihood of a reduction in the federal funds rate, with a 93.6% probability of a 0.25 basis point cut as of August 12, 2025.
Treasury Secretary Scott Bessent has publicly advocated for a more substantial cut, suggesting a potential 50 basis point reduction could be warranted to stimulate economic activity, particularly in light of recent softer jobs data. The Federal Reserve faces the delicate task of balancing its dual mandate of fostering maximum employment and maintaining price stability, with the current economic data presenting a complex scenario. Beyond the headline indices, the Russell 2000, representing small-cap stocks, also performed strongly, jumping 2.0% to 2,228.06, its highest level in six months. This broad-based market advance reflects a general optimism that lower borrowing costs could invigorate economic growth and corporate earnings. In international markets, Vietnam's stock exchanges also saw positive movement, with the VN-Index increasing by 0.21% to 1,611.60 and the HNX-Index climbing 1.16% to 279.69, reflecting robust sector performance and overall economic confidence.