The U.S. stock market experienced a robust afternoon session on Tuesday, August 12, 2025, with major indexes pushing to new highs amidst renewed optimism for potential Federal Reserve interest rate cuts. Investors enthusiastically reacted to the latest inflation data, which provided fresh signs of cooling price pressures, fueling a broad-based rally across various sectors.
Major Market Indexes Surge
All three major U.S. stock indexes posted significant gains in afternoon trading. The Dow Jones Industrial Average (DJI) surged by 449.85 points, marking a 1.02% increase to close at 44,424.94. The S&P 500 (SPX) climbed 0.59%, adding 37.43 points to reach 6,410.94, while the technology-heavy Nasdaq Composite (IXIC) advanced 0.53%, gaining 113.77 points to settle at 21,499.17. Both the S&P 500 and Nasdaq Composite hit all-time highs today, with the Nasdaq on pace for its third record close in the past four sessions. This strong performance follows a slightly lower finish on Monday, but comes after the indexes recorded their biggest weekly gains since June. The market's upward momentum is largely attributed to increasing hopes that the Federal Reserve will soon ease its monetary policy.
Key Economic Data and Upcoming Events
Today's trading was heavily influenced by the release of the July Consumer Price Index (CPI) report. The data showed that annual inflation held steady at 2.7% year-over-year, slightly better than economists' expectations. However, core inflation, which excludes volatile food and energy prices, accelerated to 3.1%, reaching a six-month high, largely linked to tariffs pushing up prices on consumer goods. Despite the uptick in core inflation, the market's reaction suggests investors are focusing on the overall cooling trend, with an 87% to 88% chance now priced in for a 25-basis-point rate cut by the Federal Reserve at its September meeting.
Looking ahead, several important economic announcements are scheduled for late August and early September. The U.S. Bureau of Economic Analysis (BEA) will release data on the Activities of U.S. Multinational Enterprises for 2023 on August 22. The second estimate for the second-quarter 2025 Gross Domestic Product (GDP) and preliminary Corporate Profits will be announced on August 28. Following this, Personal Income and Outlays for July 2025 are due on August 29, and U.S. International Trade in Goods and Services for July 2025 will be released on September 4. Investors will also be closely monitoring the minutes from the latest Federal Open Market Committee (FOMC) meeting, typically released two weeks after the meeting, for further clues on the Fed's policy trajectory. Additionally, Richmond Fed President Tom Barkin and Kansas City Fed President Jeff Schmid are slated to speak on the economic outlook today, which could provide further insights into the central bank's thinking.
Major Stock News and Sector Performance
Technology stocks were a significant driver of today's market gains, with many of the world's largest tech companies seeing positive movement. Meta Platforms (META) climbed 3% after reporting better-than-expected second-quarter earnings and raising its third-quarter outlook. Broadcom (AVGO) also performed strongly, gaining 2%. Other tech giants like Microsoft (MSFT), Apple (AAPL), and Alphabet (GOOG) each added more than 1% to their stock prices. Nvidia (NVDA) and Amazon (AMZN) inched higher, although Nvidia had initially seen a dip following reports that China advised its companies against using its H20 chips due to security concerns. However, news of President Trump's deal allowing Nvidia and Advanced Micro Devices (AMD) to ship advanced AI chips to China helped to boost sentiment. Tesla (TSLA) was an outlier among the tech heavyweights, experiencing a slight decline.
Beyond the tech sector, Intel (INTC) saw a notable rise of over 4%, building on yesterday's gains, after its CEO met with President Donald Trump at the White House. In other corporate news, Circle Internet Group (CRCL) saw its shares rise following a better-than-expected second-quarter earnings report, driven by the increasing use of its USDC stablecoin. Conversely, BigBear.ai (BBAI) shares plunged by a quarter of their value after the artificial intelligence data analytics firm slashed its revenue outlook and withdrew its profit forecast due to uncertainties surrounding government contracts. High-end sneaker maker On Holding (ONON) surged over 10% after posting strong results and boosting its guidance, attributed to booming direct-to-consumer sales. Meanwhile, Chipotle Mexican Grill (CMG) continues to face headwinds, with its stock down 21.5% since its Q2 2025 earnings report on July 23, which showed flat sales and a decrease in same-store sales.
Adding to the day's significant developments, President Trump announced an extension of the China tariff deadline by 90 days, moving it to November 9. This extension aims to provide more time for trade negotiations. In a more unusual development, President Trump also reportedly touted a "major lawsuit" against Federal Reserve Chair Jerome Powell over the rising costs of the Fed building renovation project.
Overall, the afternoon trading session reflected a market buoyed by inflation data that reinforced hopes for a more accommodative Federal Reserve stance, despite some underlying concerns about core inflation. The tech sector led the charge, with several major companies delivering strong performances, while company-specific news continued to drive significant movements in individual stocks.
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.