SPX: S&P 500 Rises Over 1% to Near Record as War Tensions Cool, Traders Eye September Cut

Broad equity index is now within 1% of its record high after Trump’s ceasefire appeared to take hold and Fed’s Powell didn’t rule out a cut in September.

💸 S&P 500 Chases Fresh Record

• The S&P 500 index (SPX) enjoyed a double shot of good news on Tuesday, rising 1.1% on the back of cooling war tensions and neutral-to-positive messages from the Fed boss. Now, the equity gauge is within 1% of its record high hit on February 19.
• After 12 days of brewing geopolitical anxiety, markets breathed a collective sigh of relief on the news that the Iran-Israel ceasefire brokered by President Trump is officially in effect. Even as both parties violated it and accused each other of breaking the truce, the risk of an immediate escalation appears to be off the table.
• Global markets have been whipsawed by the conflict, with oil prices, currencies, and safe havens reacting sharply to every new headline and Trump message. The ceasefire gave risk assets a much-needed green light to bounce back.
• The tech-heavy Nasdaq Composite IXIC jumped 1.4% yesterday with five members of the Mag 7 club in the green. Tesla TSLA lost 2.4% after surging 8% on Monday after it unveiled its robotaxi pilot program. Apple AAPL skittered down 0.6%. The Dow Jones Industrial Average DJI advanced 1.2%.

📢 Powell’s Speech Moves Markets

• In Washington, Fed Chair Jay Powell’s testimony to Congress added fuel to the rally, as he signaled the central bank is watching closely for further signs of disinflation (despite tariff threats) — and isn’t ruling out a rate cut in September, leapfrogging the July meeting.
• “We’ll get an inflation report well before the July meeting. We will continue to adapt to the evolving situation as we’ll continue to be doing,” said Powell, adding that if inflation stays on a downward trajectory, “we’ll get to a place where we can cut rates sooner rather than later.”
• For July, the odds of a rate cut, according to the CME FedWatch tool, stand at a mere 18.6%. For September, however, markets are pricing in 87% chance of a trim to borrowing costs.

✂️ Four Meetings, Two Cuts

• After all, the Fed has guided markets for two more cuts to interest rates this year. There are just four policy meetings left on the calendar for 2025, meaning if cuts are coming, the window to act is starting to narrow.
• Powell’s comments provided some relief to investors worried that sticky inflation earlier this year might force the Fed to keep rates elevated for longer. Instead, his testimony suggested the door is still open for the Fed to ease if conditions allow.
• The Fed has kept interest rates steady at 4.25% to 4.50% since December, allowing the economy to cool a little — much to the disappointment of Trump, who’s been calling for a cut for months. Powell’s two-day testimony continues today in front of the Senate Committee on Banking, Housing, and Urban Affairs.