Wall Street stocks surge on hopes for interest rate cuts by the Fed

U.S. stocks are ticking higher on Wednesday after a rally spurred by hopes for lower U.S. interest rates wrapped around the world.

The S&P 500 rose 0.4%, coming off its latest all-time high. The Dow Jones Industrial Average was up 364 points, or 0.8%, as of 10:20 a.m. Eastern time, while the Nasdaq composite was adding 0.3% to its own record set the day before.

Stocks got a lift from easing Treasury yields in the bond market, as expectations reach a virtual consensus that the Federal Reserve will cut its main interest rates for the first time this year at its next meeting in September. Lower rates can boost investment prices and the economy by making it cheaper for U.S. households and businesses to borrow to buy houses, cars or equipment, though they risk worsening inflation.

Stock indexes jumped in Asia in their first trading after Tuesday’s better-than-expected report on U.S. inflation triggered a jump in bets that a cut to interest rates is coming. Hong Kong’s Hang Seng leaped 2.6%, Japan’s Nikkei 225 rallied 1.3% and South Korea’s Kospi climbed 1.1%.

Indexes also rose in Europe, though the moves were more modest after they already had the chance to trade on the U.S. inflation data the afternoon before. Germany’s DAX returned 0.8%, and France’s CAC 40 rose 0.7%.

On Wall Street, the hopes for lower interest rates are helping to drown out criticism that the U.S. stock market has grown too expensive after its big leap since hitting a low in April.

One way companies can make their stock prices look less expensive is to deliver strong growth in profits, and Brinker International added 0.8% after reporting stronger results for the latest quarter than analysts expected. The company behind the Chili’s brand said it’s seeing more customers coming to its restaurants, and it’s also making more profit off each $1 in sales.

“Chili’s is officially back, baby back!” said CEO Kevin Hochman.

HanesBrands climbed 5.4% after it agreed to sell itself to Gildan Activewear for $2.2 billion in cash and Gildan stock. The deal would combine North Carolinas’ HanesBrands with Canada’s Gildan, and Gildan’s stock that trades in the United States rose 11.6%.

On the losing end of Wall Street were grocery stores and delivery companies, which fell after Amazon said it will offer fresh groceries to customers in more than 1,000 cities and towns through same-day delivery. Kroger fell 4.6%, and DoorDash dropped 3.6%, while Amazon rose 0.9%.

Cava Group sank 17.2% after the Mediterranean restaurant chain reported weaker revenue for the latest quarter than analysts expected, though its profit topped forecasts. It also cut its forecast for 2025 growth in sales at restaurants that have been open for more than a year, where guest traffic has been roughly flat recently from year-ago levels.

CoreWeave lost 13.7% after the company, whose cloud platform helps customers running artificial-intelligence workloads, reported a larger loss for the latest quarter than analysts expected.

In the bond market, Treasury yields eased as expectations built for coming cuts to interest rates by the Fed.

The yield on the 10-year Treasury fell to 4.23% from 4.29% late Tuesday and from 4.50% in mid-July. That’s a notable move for the bond market.

President Donald Trump has angrily been calling for cuts to help the economy, often insulting the Fed’s chair personally while doing so.

But the Fed has been hesitant so far because of the possibility that Trump’s tariffs could make inflation much worse. Lowering rates would give inflation more fuel, potentially adding oxygen to a growing fire. That’s why Fed officials have said they wanted to see more data come in about inflation before moving.

On Thursday, a report will show how bad inflation was at the wholesale level across the United States. Economists expect it to show inflation accelerated a touch to 2.4% in July from 2.3% in June.

AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

—Stan Choe, AP Business Writer