CPI data ignites a frenzy in the US stock market! The Dow rose by 500 points, and the S&P and Nasdaq are both pushing towards historical highs, with the expectation of a rate cut in September soaring to 94%.

U.S. stocks surged across the board on Tuesday, buoyed by the latest inflation data. The Dow Jones Industrial Average rose nearly 500 points, the S&P 500 jumped 1.1% approaching historical highs, and the Nasdaq Composite soared over 1.3%, targeting a new record of 21600 points. July's CPI remained flat year-on-year at 2.7%, but core inflation unexpectedly rebounded to 3.1%. The market ignored the fluctuations in core data, focusing on the Fed's interest rate cut expectations in September, which surged to 94%. Tech stocks led the market, with the AI zone becoming the main driving force. Investors’ attention turned to the PPI and retail sales data to be released this week, and Trump’s delay on the tariff decision against China also provided support.

CPI data released, US stocks respond with a big pump reaching a new high for the phase The consumer price index (CPI) report released by the U.S. Bureau of Labor Statistics on Tuesday became a market catalyst. The data shows that the year-on-year increase in July's CPI remained steady at 2.7%, unchanged from June. However, the core CPI, which excludes the more volatile food and energy prices, rose by 0.3% month-on-month, with a year-on-year increase rising to 3.1%, higher than June's 2.9%. Despite the rebound in core inflation, strong expectations that the Fed will start cutting interest rates in September dominated market sentiment, driving the three major stock indexes to rise sharply.

• Dow Jones Industrial Average: Soared nearly 500 points, marking a significant single-day rise.
• S&P 500 Index: big pump of 1.1%, closing above 6400 points, with technical patterns signaling a new bullish trend.
• Nasdaq Composite Index: Rises over 1.3%, closing near the historical high zone of 21600 points.

Expectations of interest rate cuts strengthen as the main theme, market focuses on subsequent economic data Market bets on a shift in Fed policy are heating up sharply. According to the latest pricing, traders expect the probability of a rate cut in September has surged to a high of 94%. This optimistic expectation effectively offsets the impact of a slight rise in core inflation, becoming the core logic driving the rise in risk assets. Investor confidence is expected to be further consolidated in the key data to be released next.

• Producer Price Index (PPI): Scheduled to be released this Thursday (August 14).
• Retail sales data: will be released on Friday. These two pieces of data will provide a clearer picture of the inflation path and consumer health, and may become the next catalyst for the market seeking confirmation of a Fed rate cut.

Technology stocks and AI zone lead the way, S&P and Nasdaq approach historical peak In this round of the rise in the US stock market, the technology giants and artificial intelligence (AI) zone have played a core engine role. The strong performance of the S&P 500 index breaking through 6400 points and the Nasdaq index hitting new highs is largely attributed to the impressive rise of this zone. Analysts point out that since the market low, the rebound of the top 20 components of the S&P 500 index has exceeded 40%, significantly better than the average rise of 27.9% of the remaining components. AI concept stocks represented by NVIDIA(, Microsoft), Apple(, and Google's parent company Alphabet are leading the charge, as the vigorous development and application of artificial intelligence technology have brought strong growth momentum and significant valuation increases.

Other support factors: Tariff delay and corporate earnings reports In addition to inflation data and interest rate cut expectations, other factors also provide support to the market:

• Corporate Earnings Season: The ongoing release of second-quarter performance reports remains the focus of investors.
• Trade Policy Trends: Former President Trump signed an executive order to delay the tariff increases on key goods from China for another 90 days. This decision has led the market to anticipate a short-term easing of trade tensions, creating a relatively positive trading atmosphere.

Conclusion: Although the U.S. July CPI data showed a slight rise in core inflation, it failed to shake the market's firm expectations for a Fed rate cut in September, instead triggering a strong rally in U.S. stocks. The Dow surged nearly 500 points, with both the S&P and Nasdaq nearing historical peaks, while technology stocks and the AI zone became the leading gainers. The likelihood of a rate cut in September, which is as high as 94%, has become the core trading logic in the current market. Looking ahead, the PPI and retail sales data to be released this week will provide more clues about monetary policy, and the pause in trade policy also supports market sentiment. Investors need to closely monitor economic data performance and changes in Fed policy expectations to assess the sustainability of the current rally in risk assets.