U.S. stocks closed at record highs Tuesday as investors looked ahead to key inflation reports that could shape the Federal Reserve’s next policy move.
Optimism is building that the Fed may begin cutting interest rates as soon as next week amid signs of a slowing labor market.
The Dow Jones Industrial Average and Nasdaq Composite both rose 0.4 percent, while the S&P 500 added 0.3 percent, marking a second consecutive day of gains.
Recent economic data suggesting weakening job growth has bolstered expectations for rate cuts, despite concerns about overall economic strength. Investors are now focused on two major inflation indicators due this week: the producer price index on Wednesday and the consumer price index on Thursday. Both will be closely watched by the Fed, which has held rates steady throughout 2025.
Meanwhile, the yield on the 10-year Treasury note climbed to 4.09 percent, up from 4.05 percent on Monday. Yields had hit their lowest level since early April at the start of the week, reflecting growing belief that borrowing costs could soon fall.
Markets are largely pricing in a dovish shift from the Fed, though officials have said upcoming data will guide their decisions.
