S&P 500 Hits Record as Oil Drops and July PPI Cools to 4.7%

For rate-sensitive investors, the August 13 session was less about the record high and more about a sharp repricing of Federal Reserve odds: CME Group data now shows just a 35% chance of a September rate hike, down from roughly 50% two days earlier. The catalyst was a wholesale inflation report showing producer prices rose 4.7% in July, down from 5.5% in June and slightly below expectations. With energy prices falling for a second straight month and the 10-year Treasury yield dropping to 4.65%, the market is increasingly betting that the Fed can stay patient.

On August 13, 2026, U.S. stocks pushed to an all-time high as a cooler-than-expected wholesale inflation report and easing oil prices converged to reassure investors that the Federal Reserve may keep interest rates on hold. The S&P 500 climbed 0.7% to top its prior record from the previous week, while the Dow Jones Industrial Average added 69 points, or 0.1%, and the Nasdaq Composite gained 0.8%. The advance came after the government reported producer-level prices were 4.7% higher in July than a year earlier, down from June's 5.5% pace and slightly below economists' forecasts. That sequential improvement, combined with the previous day's consumer inflation update showing energy prices falling for a second straight month, was enough to shift market pricing on Fed policy and lower the discount-rate pressure on equities.

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The S&P 500 climbed 0.7% to top its prior record from the previous week, while the Dow Jones Industrial Average added 69 points, or 0.1%, and the Nasdaq Composite gained 0.8%.

The Federal Reserve has been at the center of the market's inflation calculus. Officials are split on whether they should already be raising rates, and any move would be the first in more than three years. According to CME Group's FedWatch data, traders now assign just a 35% probability to a September rate hike, down from roughly 50% two days earlier. That rapid repricing highlights how sensitive markets remain to month-over-month inflation signals rather than the still-elevated year-over-year level. The bond market echoed the shift: the 10-year Treasury yield fell to 4.65% from 4.68% on Wednesday and 4.72% on Monday. Lower yields reduce the opportunity cost of holding stocks and support valuations across growth and rate-sensitive sectors.

Energy price relief is a crucial part of the disinflation story. Oil prices eased again on Thursday in what the source described as their latest yo-yo move, and energy prices have now fallen for two consecutive months. The 10-year Treasury yield, however, remains well above its 3.97% level from before the war with Iran sent oil and gasoline prices surging. That lingering gap shows the market has not fully priced out geopolitical risk. If oil prices resume their climb, the inflation tailwind could reverse just as quickly, putting the Fed back in a bind. For now, however, the combination of softer producer prices and lower energy costs has tilted the near-term bias toward a more patient central bank.

The market implications extend beyond the immediate index levels. The record high in the S&P 500 occurred despite a Treasury yield near 4.65%, which is still restrictive by recent historical standards. This suggests equity investors are increasingly willing to look through the absolute level of rates and focus on the direction of inflation. The two-day swing in September rate-hike odds—from 50% to 35%—reflects a meaningful belief that the Fed can avoid tightening into what appears to be a broadening disinflationary trend. If that holds, the path of least resistance for risk assets may remain upward, but the margin for error is thin because producer price inflation at 4.7% is still more than double the Fed's 2% target.