IXIC: Nasdaq Composite Logs 21st Record of the Year. Next Catalyst? Inflation Data

To cut rates or not to cut rates? That is the trillion-dollar question on every investor’s mind as markets draw closer to the final CPI before Fed officials meet next week.

📈 Nasdaq Hits 21st Record

• The Nasdaq Composite IXIC climbed 0.5% to 21,798.70 on Monday, marking its 21st record close of 2025 as tech-heavy names kept the rally alive.
• The S&P 500 edged up 0.2%, while the Dow Jones Industrial Average added 114 points or 0.3%, lifted by industrials and consumer stocks.
• Treasury yields fell across the curve, extending the recent rally in government debt after weak jobs data bolstered confidence that rate cuts are imminent. Lower yields helped boost valuations, particularly for growth-heavy sectors like your favorite tech corner. Nvidia added 0.8% on the day.

💸 Rate Cut Locked In

• After August’s dismal jobs report showing just 22,000 new positions added and June’s downward revision to a net loss of 13,000 jobs, traders see a rate cut next week as virtually certain.
• According to CME’s FedWatch Tool, markets are pricing in a two-thirds probability that the Fed will lower rates by 0.25 percentage points next week and continue with quarter-point cuts after each of the central bank’s remaining three 2025 meetings.
• There’s also a 9% chance the Fed delivers at least one larger half-point cut before year-end, especially if inflation surprises to the downside and job market weakness deepens.

🔥 Inflation Data Takes Center Stage

• The next catalyst arrives Wednesday with August CPI data USCPI, expected to show an annual rise of 2.9%, up from 2.7% in July. A hotter print could complicate rate-cut bets, while a softer reading may cement a dovish Fed pivot.
• On Thursday, producer price index USPPI data will provide a closer look at wholesale pricing trends, another critical piece of the inflation puzzle.
• Labor Department revisions to recent jobs data are due Tuesday, which could add even more volatility as traders reassess the true state of the labor market ahead of the Fed’s September 16-17 meeting.

🚀 The Setup Into the Fed’s September Meeting

• Traders are walking a fine line between optimism on easing and fears of economic slowdown. Weak job growth has strengthened the case for cuts, but persistently high inflation could limit how aggressive the Fed will move.
• The Nasdaq continues to benefit from lower yields and AI-driven optimism, while defensive sectors lag behind. If CPI cools, tech stocks could lead another leg higher into the Fed decision.
• But if inflation surprises on the upside, expect a reset in risk appetite – with Treasury yields potentially rising, tech taking a hit, and equities facing a short-term pullback.