The Dow Jones Industrial Average surged for a second consecutive session on Wednesday, climbing more than 460 points as optimism over imminent US interest rate cuts fuelled another leg higher in global equities. Wall Street’s advance was underpinned by strong technology gains, a robust second-quarter earnings season, and renewed interest in smaller-cap stocks expected to benefit from cheaper borrowing costs. Sentiment was further lifted by a sharp move in cryptocurrency markets, with ether rallying more than 5% and closing in on its 2021 record high amid surging ETF inflows and upgraded long-term forecasts. Gains in Europe and Asia mirrored the upbeat tone, with key benchmarks approaching multi-week highs, while sterling hit a three-week peak against the dollar on diverging rate expectations. Attention now turns to Thursday’s US producer price index report for further clues on inflation trends ahead of the Federal Reserve’s closely watched Jackson Hole gathering later this month.

Key Takeaways:

  • Dow Rallies for Second Day: The Dow Jones Industrial Average climbed 463.66 points, or 1.04%, to close at 44,922.27, extending Tuesday’s surge after cooler-than-expected US inflation data strengthened expectations for a September Federal Reserve rate cut. Gains were broad-based, with investors rotating into small-cap names, sending the Russell 2000 up 2%.
  • S&P 500 Marks Another Record Close: The S&P 500 rose 0.32% to 6,466.58, notching its second straight record finish as technology stocks provided support. AMD jumped 5.4%, Apple gained 1.6%, and Paramount Skydance soared 36.7%, helping offset modest weakness in other megacap names.
  • Nasdaq Edges Higher to Fresh Peak: The Nasdaq Composite added 0.14% to end at 21,713.14, setting a second consecutive record close. Trading momentum slowed compared with Tuesday’s rally, but semiconductor and AI-linked names remained in focus.
  • European Markets Extend Gains: The pan-European Stoxx 600 advanced 0.55%, up 2.7% since the start of August, as sentiment improved alongside US market records. London’s FTSE 100 added 17.42 points, or 0.19%, to 9,165.23, while Paris’ CAC 40 climbed 0.66%. Milan’s FTSE MIB rose 0.6% to 42,186, and Frankfurt’s DAX gained 0.67%. Spanish inflation ticked up to 2.7% in July from 2.3% in June, in line with forecasts, with core inflation also edging higher. Sterling hit $1.3585, its strongest since July 25, as investors priced in a slower pace of UK rate cuts relative to the US.
  • Asia Markets Track Wall Street Gains: Japan’s Nikkei 225 surged 1.3% to a record 43,274.67, with the Topix up 0.83%. Hong Kong’s Hang Seng jumped 2.6% to a two-week high of 25,614, marking its biggest one-day gain since mid-May, while China’s CSI 300 rose 0.79% and the Shanghai Composite reached its highest intraday level since December 2021. South Korea’s Kospi climbed 1.08%, the Kosdaq gained 0.86%, and Australia’s S&P/ASX 200 slipped 0.6%.
  • Oil Prices Ease on US Crude Build: Brent crude fell 0.74% to $65.63 per barrel, and WTI slipped 0.82% to $62.65 after US crude inventories unexpectedly rose by 3 million barrels last week. Losses were limited as traders awaited a Friday meeting between US President Donald Trump and Russian President Vladimir Putin, where energy sanctions could be discussed.
  • Treasury Yields Fall as Inflation Cools: The US 2-year Treasury yield dropped 5 basis points to 3.681%, the 10-year yield fell 6 basis points to 4.238%, and the 30-year yield eased to 4.828% as traders factored in near-certainty of a September Fed rate cut.
  • Ether Nears 2021 Record High: Ether rose more than 5% to $4,740.48, less than $200 below its November 2021 all-time high, driven by $1.5 billion in ETF inflows so far this week. Standard Chartered raised its year-end price target to $7,500 and projected $25,000 by 2028, citing accelerating institutional demand.

FX Today:

  • EUR/USD Holds Firm Above 1.1650 as Resistance Looms: EUR/USD closed at 1.1700, up 0.21% after trading between 1.1670 and 1.1730, extending the recovery from early August lows near 1.1600. The pair remains supported by a bullish structure in place since the mid-April breakout, with all major moving averages aligned to the upside, the 50-day at 1.1621, the 100-day at 1.1427, and the 200-day at 1.0974. Momentum has been steadily building, marked by a series of higher lows, but the 1.1750–1.1800 resistance zone continues to cap further gains. A decisive close above this band would likely trigger a push toward the June peak near 1.1900, while a slip back below 1.1650 could shift price into a broader consolidation phase. The short-term bias remains bullish while the pair trades above the 50-day SMA.
  • GBP/USD Extends Rally Toward 1.3600 as Bulls Maintain Control: GBP/USD ended the day at 1.3574, up 0.55%, after advancing from 1.3492 to a high of 1.3585, marking a third straight daily gain. The break above the 50-day SMA at 1.3520 confirmed renewed upside momentum, with additional support from the 100-day at 1.3379 and the 200-day at 1.3002. Price is now approaching the top of its consolidation range from early June, with key resistance at 1.3650–1.3700, last tested in mid-July. A sustained move above 1.3600 would set the stage for a challenge of the July high, while a drop back under 1.3520 could invite a pullback toward 1.3450. Overall, the outlook remains constructive above the 50-day SMA, with dips likely to attract buyers.
  • EUR/GBP Slides Toward 50-Day SMA as Sellers Test Support: EUR/GBP fell 0.32% to close at 0.8618 after retreating from 0.8654 to finish at its session low. The decline brings the cross toward the 50-day SMA at 0.8604, a level last tested in late June, while the 100-day at 0.8538 and the 200-day at 0.8434 remain well below as longer-term support. Price has softened from the late-July high near 0.8720, forming lower highs and signalling a short-term shift in momentum toward sellers. A break below 0.8600 could open the way for a deeper pullback toward 0.8560–0.8550, while stabilisation above the SMA would favour a recovery toward 0.8660 and potentially 0.8700.
  • USD/JPY Holds Mid-Range as Momentum Stalls Below 148.50: USD/JPY slipped 0.27% to 147.44 after reversing from 148.17 to a low of 147.09. The pair continues to consolidate between the 50-day SMA at 146.32 and the 200-day SMA at 149.29, following the late-July rejection near 150.00. Sellers have repeatedly defended the 148.50 zone, while a drop below 146.30 could expose 145.50 and 143.50. A break above 149.00 would re-energise bullish momentum and bring 150.00 back into focus. For now, range trading dominates as both sides await a decisive breakout.
  • Gold Steadies Above $3,350 as Consolidation Persists: Gold ended at $3,358, up 0.29%, after ranging between $3,343 and $3,371, holding above the 50-day SMA at $3,349 to keep short-term bullish momentum intact. The metal remains supported by the 100-day at $3,289 and the 200-day at $3,022, with buyers repeatedly defending dips into the $3,340–$3,350 area. Resistance is defined by $3,370 and the broader $3,400–$3,420 zone, which capped gains in July. A close above $3,370 could drive a retest of $3,420, while a move under $3,320 would risk a pullback toward $3,290.

Market Movers:

  • Cisco Dips After Narrow Beat and Cautious Guide: Shares fell nearly 3% after adjusted EPS of $0.99 on $14.67bn topped forecasts by a whisker, while guidance only slightly exceeded expectations.
  • Ibotta Slides on Miss and Weak Outlook: The stock plunged more than 21% as Q2 EPS came in at $0.08 versus $0.19 expected and revenue was $86m versus $90.5m, with softer Q3 guidance adding pressure.
  • Coherent Drops as It Sells Aerospace and Defence Unit: Shares fell over 16% even with EPS of $1.00 on $1.53bn beating estimates; the company agreed to sell its aerospace and defence business to Advent for $400m.
  • Bullish Gains After IPO Debut: The crypto exchange rose more than 3% after-hours; it opened at $90 on the NYSE, 143% above its $37 IPO price, and closed at $68 for an almost 84% first-day rise.
  • CoreWeave Tumbles on Cost-Heavy Outlook: CRWV sank more than 20% after signalling higher capital costs and thinner margins that cloud near-term profitability.
  • Hanesbrands Jumps on Gildan Deal; Gildan Also Rallies: HBI added 3.7% following Tuesday’s 28% surge as a $2.2bn equity purchase by Gildan was confirmed; GIL climbed 11.8% on the announcement.
  • C3.ai Rebounds Despite Broker Downgrade: AI rallied about 10% even as Oppenheimer cut the rating to market perform after weak preliminary results, with investors rotating back into AI-exposed names.
  • KinderCare Sinks on Softer Enrolment and Cut Guidance: KLC fell 22% after disappointing Q2 results and a reduction to full-year guidance tied to weaker-than-expected enrolment trends.

Wall Street’s rally extended into a second session on Wednesday, driven by renewed conviction that the Federal Reserve will begin cutting rates as soon as September, alongside a steady stream of resilient corporate earnings. Gains in Europe and Asia underscored the global breadth of the move, while sterling’s advance and ether’s rapid climb toward record territory highlighted strength across asset classes. Softer Treasury yields and moderating inflation readings kept risk appetite intact, even as oil prices eased on a surprise US crude build. With the US producer price index due Thursday and the Jackson Hole symposium approaching, investors are set to gauge whether this bullish momentum can be sustained into the final weeks of summer.