Dow Surges as Fed Rate Cut in September Almost Certain

03:49 PM EDT, 08/13/2025 (MT Newswires) -- US equity indexes advanced on Wednesday, with the Dow Jones Industrial Average climbing over 440 points, driven by near-certainty that the Federal Reserve will restart its policy easing cycle in September.

The Nasdaq was up 0.1% to 21,709.2, extending gains from Tuesday, and the S&P 500 rose 0.2% to 6,460.1. The Dow Jones Industrial Average climbed 1% to 44,889.6.

Healthcare, consumer discretionary, and materials led the gainers toward the close of trading.

The odds of a 25-basis-point cut in September were 96% as of Wednesday afternoon, according to the CME FedWatch Tool. The remaining 4% likelihood was for a 50-basis-point reduction next month.

For investors, the concern this week was that a hot July consumer price report would have removed the prospects of a September cut altogether, particularly if the tariff impact became more evident, according to a Wednesday note from Deutsche Bank.

"So, the fact that CPI was broadly as expected was met with relief, leading to equity gains and tighter credit spreads as investors became increasingly confident about another rate cut," the note said.

US Treasury yields fell, with the 10-year yield down 5.5 basis points to 4.24% and the two-year rate off by five basis points to 3.68%.

The ICE US Dollar Index fell 0.3% to 97.85, trading close to its lows for the year.

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