On Tuesday, U.S. stocks saw a strong rally after fresh inflation data suggested consumer prices rose less than expected in July. This eased worries that recent trade tariffs and global uncertainties would push costs higher, and it reinforced hopes that the Federal Reserve might cut interest rates as soon as September.

The Dow Jones Industrial Average gained 463 points, or about 1.1%. The S&P 500 climbed 1% to reach a new intraday high, while the Nasdaq Composite rose 1.3%, also setting a new record during the session. Smaller companies, often more sensitive to borrowing costs, led the gains, with the Russell 2000 nearly tripling the S&P’s percentage move.

The latest Consumer Price Index showed prices up 2.7% from a year earlier, slightly lower than the 2.8% economists expected. Core CPI, which excludes food and energy prices, rose 3.1%, a touch above the forecast of 3%. The cooler headline inflation number gave markets a boost, as it indicated price pressures remain under control.

Following the release, traders dramatically increased their bets on a rate cut in September. Data from the CME FedWatch Tool showed a 91% chance of a cut, up from 85% before the report. Expectations for further cuts in October and December also strengthened.

Corporate news helped fuel the rally. Circle Internet Group, a major issuer of the USDC stablecoin, saw its shares jump 12% after reporting a 53% year-over-year revenue increase in the second quarter. AST SpaceMobile surged 11% after unveiling ambitious satellite launch plans through 2026, despite missing revenue forecasts. Mercury Systems gained more than 24% after its earnings easily topped expectations.

Market breadth was impressive. Twenty-one S&P 500 companies hit new 52-week highs, including Meta Platforms, Electronic Arts, eBay, and Goldman Sachs. Some stocks, however, faced headwinds—ten companies, including Adobe and Salesforce, touched new lows.

Trade policy developments also influenced sentiment. President Donald Trump announced a 90-day extension of the pause on higher tariffs for Chinese goods, reducing near-term uncertainty for businesses and investors.

Beyond U.S. borders, Asia-Pacific markets mostly ended higher, with Japan’s Nikkei 225 up over 2%, while China’s CSI 300 and Hong Kong’s Hang Seng also posted gains.

In the commodities space, a metals and mining ETF reached its highest level since 2008, helped by sharp gains in companies like Alcoa and Cleveland-Cliffs.

Overall, the day’s action painted a picture of renewed investor optimism—driven by cooling inflation, rising hopes for lower borrowing costs, and strong pockets of corporate performance. With the Federal Reserve’s Jackson Hole meeting later this month and the September policy decision looming, markets appear positioned for more movement in the weeks ahead.