U.S. stocks rise in August - S&P 500 up 1.9%

U.S. stock markets closed August on a positive note, with major indexes posting gains as investors looked ahead to a possible interest rate cut by the Federal Reserve in September.

The S&P 500 index rose 1.9%, the Nasdaq gained 1.6%, and the Dow Jones Industrial Average advanced 3.2% during the month.

Markets found support in weaker economic data releases and limited effects from recently imposed tariffs. Many traders interpreted these developments as reinforcing expectations that the Fed will step in with a rate cut next month to support growth. Lower borrowing costs could provide relief to businesses and consumers, boosting corporate earnings and market momentum in the coming quarters.

Economists, however, warn that an aggressive rate cut could backfire. Analysts argue that the Fed, under pressure from the White House, risks overcutting rates at a time when inflationary pressures remain elevated. A premature policy shift could reignite price growth, undermining recent progress in stabilizing the economy.

The coming weeks are expected to bring more clarity. Investors will closely watch upcoming inflation reports, job market data, and remarks from Fed officials ahead of the central bank’s next policy meeting.