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US Stocks Pause Ahead of Key Inflation Data, Fed Rate Cut Bets Linger
14 Aug
Summary
- US stock futures trade flat as investors await PPI and jobless claims data
- Healthcare and small-cap stocks outperform, signaling defensive rotation
- Traders divided on whether rally reflects genuine "soft landing" or temporary relief
On August 14, 2025, the US stock market paused after a two-day rally that pushed the S&P 500 and Nasdaq to fresh record closes. Futures for the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite traded virtually unchanged in early hours, as traders braced for the release of the Producer Price Index (PPI) and weekly jobless claims data.
The calm came amid mounting expectations that the Federal Reserve will cut interest rates next month. However, a hotter-than-expected PPI print could test this confidence, as the central bank navigates the delicate balance between taming inflation and supporting economic growth.
Notably, the market has seen a shift in leadership, with healthcare stocks and small-cap companies emerging as unexpected leaders. Analysts point to a defensive rotation, as some investors quietly brace for potential choppiness in the fourth quarter. In contrast, the mega-cap tech stocks that drove much of the recent gains are showing signs of fatigue.
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Traders remain divided on whether the current rally reflects a genuine "soft landing" scenario, where inflation cools without a recession, or a temporary relief rally ahead of an earnings slowdown. The Fed's Beige Book last week hinted at moderating growth, particularly in manufacturing and commercial real estate, even as consumer spending held steady.
