S&P 500 – Riding the Rate Cut Wave

The S&P 500 is holding strong near record highs around 6,500, steadily grinding higher after each pullback. The index is now up 36% off the April 7th lows.

Lower interest rates make financing cheaper for corporations. That supports earnings growth, boosts valuations, and tends to fuel equity markets — especially for sectors sensitive to borrowing costs.

Weak U.S. labor data has reinforced the Fed’s dovish tilt, locking in expectations for September rate cuts. Traders are now debating whether we’ll see a 25 bps move or a more aggressive 50 bps cut. More easing = more growth potential, which is why equities keep climbing.

Today’s weaker-than-expected PPI numbers show inflation pressures easing. That only strengthens the case for Fed cuts and keeps the bullish narrative alive for risk assets like the S&P.

All eyes now shift to tomorrow’s CPI release. A soft print could cement the case for a 50 bps cut, while stickier inflation would keep the Fed cautious with 25 bps.