S&P 500 Hits Record High as Odds for September Rate Hike Plunge

Key Facts

In a move reflecting a significant shift in U.S. monetary policy expectations, equity markets showed notable resilience at the end of the week. According to reports, the S&P 500 reached a new record high despite a generally mixed performance across broader indices. This upward momentum is primarily driven by a sharp decline in investor bets on further monetary tightening by the Federal Reserve in its upcoming meeting.

Per market data, sentiment has shifted drastically as the probability of a September rate hike fell to 32%, down from 72% at the start of the month. This cooling of expectations was supported by softer-than-expected inflation data and weaker retail sales figures, which reinforced the narrative that the Fed may pause its hiking cycle to support economic stability.

Looking at recent authoritative data, the U.S. annual Inflation Rate (CPI) cooled to 3.4% as of August 12, 2026. Traders are now closely monitoring the Core CPI, which stood at 2.5% annually in the same period, as a key catalyst for market direction leading into the next Federal Reserve policy decision.