U.S. equities rallied hard on August 13 after July producer price data came in cooler than expected, sending the S&P 500 to a fresh record close above 7,800 for the first time in the index's history. The index added roughly $700 billion in market value on the day, part of a broader run that has added close to $5 trillion in value over the preceding 15 trading days, while the Nasdaq 100 climbed about 1% to reclaim 30,000 for the first time in 43 days and the Russell 2000 also touched a new all-time high.
The trigger was July's Producer Price Index, which cooled to 4.7% year-over-year, below the 4.9% forecast and down sharply from 5.5% in June. Core PPI eased to 4.2% from 4.7%, and the monthly reading came in flat at 0.0% against an expected 0.2% increase — the first such flat monthly print since June 2025.
Rate Expectations Shift
The data moved the market's read on where the Federal Reserve goes next. According to CME Group's FedWatch tool, the odds of a September rate hike slipped to roughly 34% following the release, while the probability the Fed holds rates steady rose to nearly 66% — a notable shift in a cycle where policymakers have been raising rates to contain inflation rather than cutting them. Growth and semiconductor names led the advance, with memory-chip stocks in particular extending a multi-day bounce as investors rotated back into the AI and chip trade.
A Market Still Sensitive to the Next Print
The rally marks the S&P 500's 27th record close of the year, underscoring how quickly sentiment has swung on a single data point after a stretch of hawkish commentary from Fed officials warning that more tightening could still be needed. That sensitivity cuts both ways: a single inflation surprise sent stocks to new highs this week, and the same mechanism could just as easily send them lower if the next CPI or PPI print reverses the trend. For risk assets more broadly, including crypto, the shift in rate expectations toward a pause rather than further hikes removes one source of pressure that had been weighing on valuations through the summer.
