S&P 500 and Nasdaq Edge Higher to Record Closes as Rate Cut Hopes Persist

U.S. equities extended their winning streak on Thursday, with the S&P 500 and Nasdaq Composite setting fresh intraday and closing highs, though gains were modest amid some profit-taking. The momentum carried over from yesterday’s July CPI release, which reinforced expectations for a more accommodative Federal Reserve.

The S&P 500 peaked at 6,480.28 before settling at a record 6,466.58, up 0.3%. The Nasdaq Composite touched 21,803.75 during the session and closed at a record 21,713.14, rising 0.1%.

Investor optimism over rate cuts was bolstered by Treasury Secretary Scott Bessent, who reiterated calls for a 50-basis-point cut, suggesting the Fed should ultimately lower rates by at least 150 basis points. His remarks helped push the CME FedWatch Tool’s implied probability of a September quarter-point cut to 99.9% in the morning, though that slipped to 97.9% after Chicago Fed President Austan Goolsbee warned he is not yet committed to cutting in September, citing persistent services inflation. Atlanta Fed President Raphael Bostic added that the central bank can afford to wait given continued labor market strength.

While an easier policy path still appears likely, mega-cap underperformance kept gains in check for the S&P 500 and Nasdaq. The Dow Jones Industrial Average outperformed with a 1.1% rise, benefiting from limited exposure to struggling tech giants, though Microsoft fell 1.6%. The Vanguard Mega Cap Growth ETF gained just 0.1%, while the Russell 2000 rallied 2.0% and the S&P 500 Equal Weighted Index advanced 1.3%, both outperforming the market-weighted benchmark.

Sector performance reflected the split, with communication services (-0.5%), information technology (-0.2%), and consumer staples (-0.4%) finishing lower, while eight sectors posted gains. Materials (+1.7%), health care (+1.6%), consumer discretionary (+1.3%), and energy (+1.2%) led the advance.

Consumer discretionary stocks, especially homebuilders, jumped on the prospect of lower borrowing costs, sending the iShares U.S. Home Construction ETF up 4.5%. Health care was supported by strength in biotechnology and big names such as Eli Lilly (+3.33%) and UnitedHealth (+3.93%).

The day’s trading continued a recent trend of bargain hunting in this year’s lagging sectors, paired with ongoing small-cap leadership. Combined with weakness in several mega-cap names, the move may signal a broader market rotation toward underappreciated stocks poised to benefit from looser monetary policy.

The FTinvest 11 portfolio extended its record-setting run today. After quickly clearing the 840 mark at the open, the index turned its attention to the next milestone at 850. The push continued for nearly the entire session, and in the final stretch the level was finally breached. By the close, the index was up 1.51% for the day, finishing at a new all-time high of 851.69.