Wall Street stocks surge over 1% as lower CPI raises rate cut hopes

U.S. stocks opened strongly today, with all three major indices recording gains of over 1% in early trading. The Dow Jones Industrial Average rose by approximately 1.2%, the S&P 500 gained 1.1%, and the Nasdaq Composite climbed about 1.0%. This synchronized upward trend is relatively rare amid recent market volatility, indicating that investors are actively adjusting their positions in response to the newly released U.S. inflation data.

The Consumer Price Index (CPI) released by the U.S. Department of Labor on Tuesday showed that the headline year-over-year inflation rate for August was 3.7%, ticking down slightly from 3.8% the previous month. Meanwhile, the core CPI (excluding energy and food) rose 4.3% year-over-year, also coming in below the market expectation of 4.5%. Although this data remains above the Federal Reserve's 2% inflation target, it indicates that the momentum of price increases is gradually easing.

Faced with signs of cooling inflation, the market generally expects that the Federal Reserve may slow the pace of rate hikes at future policy meetings and could even initiate rate cuts as early as next year. Since 2022, the Fed has implemented consecutive interest rate hikes, raising the benchmark rate from 0.25% to the 5.25% to 5.5% range. Investors have consequently shifted their focus from short-term interest rate risks to