04:26 PM EDT, 08/12/2025 (MT Newswires) -- US equity indexes jumped on Tuesday as July's inflation data bifurcated government bond yields and sent bets in favor of a September interest-rate cut soaring.

The Nasdaq rose 1.4% to 21,681.90 at the close of trading, after hitting a record 21,689.68 intraday. The S&P 500 climbed 1.1% to 6,445.76, also after scaling a fresh peak of 6,446.55 earlier in the session. The Dow Jones Industrial Average advanced 1% to 44,431.37, hovering close to its all-time high of 45,073.63.

All sectors were up, with communication services, technology, and financials leading the gainers.

The US seasonally adjusted consumer price index rose 0.2% in July, as expected in a survey compiled by Bloomberg, and following a 0.3% gain in June, according to data released Tuesday by the Bureau of Labor Statistics. Core CPI, which excludes food and energy prices, increased 0.3%, as expected, after a 0.2% gain in June.

The year-over-year rate for headline CPI remained at 2.7%, while core CPI rose 3.1% annually from 2.9% in the previous month, the strongest pace since February. Energy prices dropped 1.1% in July, the largest since March, according to a Stifel research note.

"Tariffs do not appear to have had much of an impact on consumer prices just yet," Jefferies Chief US Economist Thomas Simons said in a research note. "Arguments against rate cuts that are based on concerns about inflation coming from tariffs need to see support via persistent increases in imported goods for consumers and in input materials for service providers that eventually force them to raise prices as well."

The odds of a 25-basis-point cut in interest rates in September jumped to 94% as of Tuesday afternoon, versus 86% a day ago, according to the CME FedWatch Tool.

The 0.3% increase in core CPI is the largest since January, and the 3.1% year-over-year reading of the metric, which excludes the more volatile food and energy prices, is the highest since February, according to the Stifel note.

"The acceleration in inflation [core CPI] reflects a rise in services costs - with services prices up 0.4% in June, the most since January - as well as evidence that some tariffs continue to filter into the economy," Lindsey Piegza, Chief Economist at Stifel, said in the note. "Prices for goods that are more sensitive to a rise in levies - furniture, apparel, and toys - for example, continued to rise at the start of the third quarter."

US Treasury yields traded mixed after the equity market closed. The 10-year yield climbed 1.6 basis points to 4.29% while the two-year rate dropped 2.1 basis points to 3.73%.

In company news, Cardinal Health ( CAH ) filed a registration with the US Securities and Exchange Commission for the potential sale of securities from time to time in one or more offerings. Evercore ISI cut its price target on Cardinal to $190 from $200. Shares of Cardinal fell 7.2%, the worst performer in the S&P 500.

West Texas Intermediate crude oil futures slid 1.3% to $63.16 a barrel, the lowest since early June.

Rising supply from the Organization of the Petroleum Exporting Countries and concerns that demand from the US and China will be under pressure pushed crude oil lower, Commerzbank said in a note Tuesday. The upcoming meeting between Presidents Donald Trump and Vladimir Putin, scheduled for Friday, to broker a Russia-Ukraine truce boosted expectations of a ceasefire in Ukraine or a potential easing of sanctions on Moscow, the note added.

Gold futures slipped 0.2% to $3,396.2 per ounce.