S&P 500 and Nasdaq Futures Reach Record Highs on Expectations of Fed Rate Cuts

In a buoyant session on Wednesday, August 13, 2025, futures tied to the S&P 500 and Nasdaq soared to unprecedented levels, as investors grew increasingly confident that the Federal Reserve would resume cutting interest rates as early as next month. The rally was sparked by data suggesting that U.S. import tariffs had yet to permeate consumer price indices—a sign that underlying inflation pressures might be softer than feared. Compounding that, recent softness in the labor market and shifts within the Federal Reserve’s leadership further reinforced expectations of a dovish turn in monetary policy.

Data from leading analytics platforms revealed that interest rate futures were pricing in a remarkable 98% chance of a 25-basis-point cut in September, up sharply from just 88.8% on the previous day. Additionally, several major banks and analysts have flagged that the Fed may continue to ease policy, collectively cutting around 100 basis points over the coming months. This more accommodative stance sent a wave of optimism through equity markets.

Premarket trading reflected the upbeat sentiment: Dow E-minis ticked higher by roughly 104 points (0.23%), S&P 500 E-minis gained around 11.5 points (0.17%), and Nasdaq 100 E-minis rose approximately 54 points (0.23%). Notably, the CBOE Volatility Index—commonly known as Wall Street’s “fear gauge”—plummeted to a level unseen since January, underscoring a broad decline in investor anxiety.

Rate-sensitive banking stocks, long seen as early beneficiaries of a steepening yield curve, rallied modestly. Institutions such as Bank of America and Citigroup experienced gains in the premarket, bolstered by expectations that rising long-term rates would expand their profit margins.

On the corporate front, not all news was rosy. AI-focused data-center operator CoreWeave suffered a significant setback, with its stock dropping over 8% following the release of a much larger-than-anticipated loss. In contrast, energy firm Venture Global enjoyed a robust gain of over 8% after triumphing in a legal battle against Shell over LNG delivery obligations.

Broader geopolitical and macroeconomic headlines also captured investor attention. Oil prices held steady around the $60-per-barrel mark as markets awaited a virtual summit where U.S. President Donald Trump was set to discuss the escalating Russo‐Ukraine conflict with European counterparts. Additionally, developments in U.S.–China trade, particularly potential revenue-sharing agreements involving key chipmakers, remained closely watched for their implications on both tech-sector earnings and trade diplomacy.