LIVE MARKETS-Wall Street rallies as S&P, Nasdaq end at record closing highs

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WALL STREET RALLIES AS S&P, NASDAQ HIT RECORD CLOSING HIGHS

Shares on Wall Street on Tuesday recovered from Monday's losses, with the Nasdaq .IXIC and S&P 500 .SPX hitting record closing highs, bolstered by an inflation report for July that reinforced expectations of an interest rate cut by the Federal Reserve at its September meeting.

U.S. consumer prices increased moderately in July, largely in line with expectations. The consumer price index rose 0.2% last month after gaining 0.3% in June, data showed. Excluding volatile food and energy components, the CPI rose 0.3%, the biggest gain since January, after climbing 0.2% in June.

"The core message in core inflation is that any tariff-induced inflation is likely to be a process, not an event," writes Brian Jacobsen, chief economist, at Annex Wealth Management in emailed comments.

"As long as breakeven inflation rates and other market based measures of inflation expectations stay contained, the Fed should feel comfortable enough to recommence cutting in September."

U.S. Fed funds futures have now fully priced in a cut at next month's policy meeting, with about 61 basis points of easing factored in for 2025.

The quality of economic data remains a concern, however, weeks after President Donald Trump fired the head of the Bureau of Labor Statistics following downward revisions to previous months' nonfarm payrolls counts. Markets are monitoring developments around Trump's nominee, E.J. Antoni, to the Bureau Commissioner post and potential candidates for the Fed's top job.

Analysts overall said they continue to have conviction around the Mag 7 stocks MAGS.K and other technology shares.

"The first thing I'd guide is continue to lean into the theme of the big are getting bigger. We continue to have conviction around mega-tech and technology," said Katherine Bordlemay, co-head of client portfolio management, fundamental equities at Goldman Sachs Asset Management.

Here's the closing snapshot of financial markets:

(Gertrude Chavez-Dreyfuss, Saeed Azhar)

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