The U.S. stock market rally continued on Wednesday, driven by growing investor optimism that the Federal Reserve will cut interest rates as early as September. Major indexes hit or approached fresh records as Wall Street joined a worldwide surge in equities.
The S&P 500 gained 0.4%, extending its record-setting streak, while the Dow Jones Industrial Average climbed 259 points, or 0.6%. The Nasdaq Composite added 0.5%, marking another all-time high.
Lower Treasury yields fueled the rally, signaling investor confidence in a more supportive monetary policy environment.
Global Gains Strengthen the U.S. Stock Market Rally
Overseas markets echoed Wall Street’s strength. Asian indexes posted significant gains following a better-than-expected U.S. inflation report.
-
Hang Seng (Hong Kong) surged 2.6%
-
Nikkei 225 (Japan) advanced 1.3%
-
Kospi (South Korea) climbed 1.1%
European markets followed suit with modest increases, with Germany’s DAX up 0.7% and France’s CAC 40 gaining 0.5%.
Investors are betting that cooling inflation data will give the Fed room to act without reigniting price pressures too strongly.
Corporate Highlights Boost Investor Sentiment
Earnings reports and corporate deals added fresh momentum to the U.S. stock market rally:
-
Brinker International (NYSE:EAT) surged 7.5% after strong quarterly results, boosted by increased customer visits and higher profit margins at its Chili’s restaurants.
-
HanesBrands (NYSE:HBI) jumped 4.2% after agreeing to be acquired by Gildan Activewear (NYSE:GIL) for $2.2 billion in cash and stock. Gildan shares surged 10.1% in U.S. trading.
-
Amazon (NASDAQ:AMZN) rose 1.2% after announcing same-day fresh grocery delivery in more than 1,000 U.S. cities and towns. The news pressured competitors, with Kroger (NYSE:KR) dropping 4.5%.
Market Laggards Temper the Rally
Not all stocks participated in the upswing.
-
Cava Group (NYSE:CAVA) plunged 16.8% after reporting weaker-than-expected revenue and cutting its 2025 growth outlook.
-
CoreWeave saw its shares sink 13.2% after reporting a larger-than-expected loss, raising concerns about demand in the AI cloud services sector.
Bond Market Moves Support Equities
The bond market added fuel to the U.S. stock market rally. The 10-year U.S. Treasury yield fell to 4.24%, down from 4.29% the previous day and well below mid-July’s 4.50%. Lower yields generally make stocks more attractive, especially in growth-oriented sectors.
Political pressure is also in the mix. Former President Donald Trump has been vocal in urging the Fed to cut rates, warning about economic slowdowns, though concerns remain that his proposed tariffs could worsen inflation.
What’s Next for the U.S. Stock Market Rally?
The next key data point will come Thursday, when wholesale inflation figures are released. Economists expect a slight uptick to 2.4% in July from 2.3% in June. Any sign that inflation remains contained could further strengthen bets on a September rate cut.
For now, investors appear confident that a supportive Fed, solid corporate earnings, and improving global sentiment will keep the U.S. stock market rally alive. But with valuations already stretched, continued gains will likely depend on earnings growth and confirmation that inflation remains under control.
Featured Image – Freepik
