US Equity Indexes Touch All-Time Highs Amid Soaring Bets Fed to Focus on Weak Labor Market

01:15 PM EDT, 09/11/2025 (MT Newswires) -- US equity indexes rose after midday Thursday as a surge in odds favoring three interest-rate cuts this year implied the market expects the Federal Reserve to look past the steady core inflation print and focus more on surging jobless claims.

The Dow Jones Industrial Average traded up 1.3% to 46,059.3, after hitting an all-time high of 46,085.50. The Nasdaq Composite was up 0.6% to 22,021.1, after scaling a new peak of 22,048.65 earlier in the session. The S&P 500 traded 0.8% higher at 6,582.1, after touching a record 6,586.75.

The consumer price index rose by 0.4% in August, up from 0.2% in July and representing the highest since January, the Bureau of Labor Statistics reported Thursday. A Bloomberg-polled consensus was 0.3%. Annually, inflation accelerated 2.9% from 2.7%, in line with the outlook.

However, core inflation was steady at 0.3% in August, while the annual core measure was unchanged at 3.1%. Both prints were in line with market expectations.

"The [inflation] report will be scrutinized for signs that the parts of the CPI basket not affected by tariffs (e.g., core services) are seeing enough disinflation to justify an extended rate cut cycle," Thierry Wizman, global foreign-exchange and rates strategist at Macquarie Group, said in a note.

Initial jobless claims rose to 263,000 in the week ended Sept. 6 from a downwardly revised 236,000 in the previous week, compared with expectations for 235,000 in a Bloomberg-compiled survey. Initial claims were at their highest since the week ended Oct. 23, 2021, at 268,000.

Markets are now pricing a 75% probability that the Federal Open Market Committee will lower interest rates by 75 basis points by December, up from 68% a day ago, according to the CME FedWatch Tool. There is a 9.3% likelihood that the Fed will reduce its target rate by 100 basis points between September and December.

There is zero chance that the Fed will leave rates unchanged next week, meaning the policy easing cycle will resume on Sept. 17.

Treasury yields fell, with the 10-year down 2.5 basis points to 4.01% and the two-year rate declining 1.6 basis points to 3.52%.

West Texas Intermediate crude oil futures slumped 1.9% to $62.47 a barrel.

In company news, shares of Centene (CNC) surged more than 12% intraday, the top gainer on the S&P 500, after the company said in a regulatory filing that its business and financial results through August are consistent with its full-year 2025 forecast.

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