Stocks Rally on Fed Rate Cut Bets as Inflation Cools

US equities extended gains Wednesday, with the S&P 500 and Nasdaq Composite posting consecutive record closes as traders priced in near-certain Federal Reserve easing. The Dow Jones Industrial Average surged 1%, outpacing broader indices after July's cooler-than-expected CPI print.

Treasury Secretary Scott Bessent amplified dovish expectations, urging 150-175 basis points of cuts starting with a 50bp reduction in September. CME Group data shows markets now fully pricing a September move, with crypto markets poised to benefit from renewed liquidity tailwinds.

The risk-on pivot follows emerging labor market softness, creating ideal conditions for alternative assets. Bitcoin and ethereum typically outperform in such monetary loosening cycles, as seen during 2019's insurance cuts.