The U.S. stock market opened Tuesday, August 12, 2025, with a strong upward trajectory, fueled by fresh inflation data that came in softer than anticipated, significantly boosting expectations for a Federal Reserve interest rate cut as early as September. All three major indexes—the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average—showed robust gains in early trading, with both the S&P 500 and Nasdaq Composite eyeing new record highs. This positive sentiment marks a notable shift from Monday's closing, where all benchmarks ended in negative territory.
As of early Tuesday trading, the S&P 500 rose approximately 0.5% to 0.6%, positioning itself to potentially surpass its all-time high set just two weeks prior. The Dow Jones Industrial Average (DJIA) climbed by over 200 points, seeing a gain of 0.6%, while the technology-heavy Nasdaq Composite (IXIC) surged between 0.5% and 0.7%, also heading towards a new record. This widespread optimism is largely attributed to the July Consumer Price Index (CPI) report, released this morning, which indicated that U.S. consumer prices for groceries, gasoline, and other living costs were 2.7% higher in July compared to a year earlier. This figure, while matching June's inflation rate, was slightly below the 2.8% economists had projected. The core CPI, which excludes volatile food and energy prices, showed a 0.3% increase for July, aligning with expectations.
The better-than-expected inflation figures have solidified traders' bets on a September rate cut by the Federal Reserve, with market participants now pricing in a substantial 94% chance of a quarter-point reduction. Lower interest rates are generally seen as a catalyst for economic growth, making borrowing cheaper for businesses and consumers, thereby stimulating investment and spending. This prospect is providing a significant lift to equity markets today.
Looking ahead, the market calendar remains packed with crucial economic data and corporate earnings that could influence investor sentiment throughout the week. Today, in addition to the pivotal CPI report, Richmond Fed President Tom Barkin is scheduled to deliver remarks, which will be closely scrutinized for any hints regarding the Fed's monetary policy stance. On the corporate earnings front, Cava Group (CAVA) and Circle Internet Group (CIRCLE) are among the companies slated to release their second-quarter 2025 financial results today.
Mid-week will bring further insights into the economic landscape. Wednesday, August 13, will feature speeches from Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic, offering more perspectives from the central bank. Cisco Systems (CSCO) is also set to report its earnings on Wednesday. As the week progresses, Thursday, August 14, will see the release of the Producer Price Index (PPI) for July, providing a look at inflation from the producers' perspective. Earnings reports from Applied Materials (AMAT), Deere (DE), and JD.com (JD) will also be in focus. The week concludes with a flurry of data on Friday, August 15, including U.S. Retail Sales for July, preliminary Consumer Sentiment for August, and the Import/Export Price Index, among others. Later in the month, the highly anticipated Jackson Hole Symposium will gather central bankers and economists, an event often used to signal shifts in monetary policy.
In terms of individual stock movements, several companies are making headlines. Micron Technology Inc. (MU) saw its shares surge by 4.1% in early trading after the company raised its fourth-quarter fiscal 2025 earnings per share and revenue guidance, signaling strong performance. Conversely, AAON Inc. (AAON) experienced a significant decline of 10.5% after reporting second-quarter 2025 adjusted earnings that missed analysts' consensus estimates. Legend Biotech Corp. (LEGN) also faced headwinds, with its shares falling 2.1% following a wider-than-expected adjusted loss for the second quarter. On a more positive note, Franco-Nevada Corp. (FNV) saw its shares rise by 2.4% after exceeding second-quarter adjusted earnings expectations.
The semiconductor sector is also under the spotlight, with Nvidia (NVDA) and Advanced Micro Devices (AMD) seeing their shares dip in premarket trading. Both companies confirmed a 15% China sales revenue-sharing agreement with the U.S. government to maintain export licenses. While this secures market access, analysts have warned it could potentially squeeze margins. Despite this, Wells Fargo notably raised its price target for Nvidia to $220, citing robust demand for AI chips. Apple (AAPL) has shown resilience, posting strong earnings and benefiting from tariff relief on certain components, even amidst broader market caution. However, C3.ai (AI) plunged 26% after its revenue forecast fell short of analysts' estimates, accompanied by a brokerage downgrade. Meanwhile, smaller cap stocks like Equillium, Inc. (EQ) soared 78.9%, Entero Therapeutics, Inc. (ENTO) climbed 66.5%, and Telos Corporation (TLS) jumped 62.6%, demonstrating significant individual gains.
Beyond the immediate economic data, ongoing U.S.-China trade negotiations continue to be a source of investor concern. President Trump's recent decision to grant a 90-day extension on tariffs provides some temporary relief, but the underlying trade tensions remain a key factor influencing global market sentiment. The current market environment reflects a delicate balance between optimism for lower interest rates and lingering geopolitical and inflationary pressures. The resilience of individual investors, coupled with a record pace of stock buybacks by American companies, particularly in the tech and banking sectors, also contributes to the market's current strength.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.