The Nasdaq reached new all-time highs as traders predict a September rate cut. The recent US CPI report aligned with expectations, not altering the anticipated cut. Following the report, pricing for a Federal Reserve easing shifted from 57 basis points to 61 basis points. Most Fed members support a September cut, but a hot non-farm payroll report could influence future cut probabilities.
Jackson Hole Symposium Highlights
Attention is on Fed Chair Powell’s address at the Jackson Hole Symposium, where he will likely stress decisions will be based on comprehensive data. The Fed’s dovish stance, despite a strong economy, benefits the stock market, supporting a bullish trend unless the Fed opts for rate hikes or negative growth occurs.
On the daily chart, Nasdaq shows increased gains and FOMO. Buyers might find a better risk-to-reward setup around the trendline, requiring a pullback, unlikely before September. A break below could lead to a pullback to the 22,400 level.
The 4-hour chart shows bullish momentum with a minor trendline. Buyers may rely on this trendline for new highs, while sellers aim for a drop toward the major trendline. The 1-hour chart cautions against chasing prices, with opportunities around minor support at 23,965. Economic indicators like US PPI, Jobless Claims, and Retail Sales are upcoming, alongside Fed comments after recent US CPI data.
Nasdaq and Federal Reserve Rate Cut Expectations
Given the Nasdaq’s push to new highs around 24,000, the primary driver for derivatives traders is the strong expectation of a Federal Reserve rate cut in September. The recent July 2025 CPI data came in at 3.1%, confirming a continued cooling trend and solidifying market bets on monetary easing. We see this reflected in the CME FedWatch Tool, which now shows a roughly 75% probability of a 25-basis-point cut next month.
This environment, where the economy remains robust but the Fed signals a dovish stance, is highly favorable for growth assets. We saw a similar dynamic back in 2019 when the Fed executed a “mid-cycle adjustment,” cutting rates despite a non-recessionary economy, which fueled further market gains. Therefore, the path of least resistance for the market appears to be upward, barring a sudden hawkish shift from policymakers.
For bullish traders, chasing the market at these all-time highs presents a poor risk-to-reward ratio. A more prudent strategy would involve using any pullback toward the minor trendline support, near 23,800, to initiate long positions, such as buying call options or selling puts. With the Nasdaq already up approximately 20% year-to-date, patience will be key to finding a favorable entry.
Conversely, traders looking to hedge or speculate on a downturn should watch for a decisive break below that same 4-hour trendline. Such a move would be the first sign of weakening momentum and could be a trigger to buy put options. A confirmed break could open a path for a larger correction down toward the major daily trendline support near the 22,400 level.
In the immediate days ahead, we will be watching tomorrow’s Producer Price Index (PPI) and jobless claims figures for any signs of unexpected inflation or labor market weakness. Friday’s retail sales and University of Michigan Consumer Sentiment data will also be critical. Any significant deviation from expectations in this data could cause a short-term repricing of Fed actions before we get more clarity from Jackson Hole.
