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Indexes up: Dow 0.86%, S&P 500 0.44%, Nasdaq 0.39%

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Traders fully price in 25 bps Fed rate cut in September

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CBOE volatility index hits lowest level since January

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CoreWeave ( CRWV ) falls after larger-than-expected Q2 net loss

(Updates for market open)

By Johann M Cherian and Sanchayaita Roy

Aug 13 (Reuters) -

The benchmark S&P 500 and the Nasdaq hit record highs on

Wednesday, underpinned by gains in megacap companies as

investors were increasingly confident that the Federal Reserve

could restart its monetary policy easing cycle next month.

Signs that U.S. tariffs on imports have not fully

filtered into

headline consumer prices

came as a relief for investors this week as they scour for

insights on the impact trade uncertainty has had on the economy.

Despite data showing underlying price pressures were on

the rise, markets also factored in recent weakness in the job

market and a shake-up at the Federal Reserve as they leaned in

favor of a potential dovish move by the central bank in

September.

Traders are now fully pricing in a 25 basis points

interest rate cut, according to the CME's FedWatch Tool, up from

89.2% last week. The central bank last lowered borrowing costs

in December.

"We're pretty much certain that we'll have at least 25

basis points of rate cuts in the month of September," said

Thomas Hayes, chairman at Great Hill Capital LLC in NY, and

noted that the Fed would have to respond to labor market

weakness.

At 09:59 a.m. ET, the Dow Jones Industrial Average

rose 379.32 points, or 0.86%, to 44,839.44, the S&P 500

gained 28.17 points, or 0.44%, to 6,474.20 and the Nasdaq

Composite gained 84.32 points, or 0.39%, to 21,766.23.

Ten of the 11 S&P 500 sectors were higher, led by

consumer discretionary that gained 1.1%, with

Amazon.com ( AMZN ) and Tesla up over 1.5% each.

The blue-chip Dow was less than 1% away from an

all-time high and the Russell 2000 index, which tracks

rate-sensitive small-cap companies, added 0.8% to hit a

six-month high.

"Rates coming down will also help (small-cap companies)

refinance their debt loads, which is very positive for a lot of

the laggard stocks that haven't moved as much in this big move

off the April lows," Hayes said.

The CBOE volatility index, popularly referred to as

Wall Street's fear gauge, dropped to 14.46 - its lowest since

January.

Later in the day, investors will scrutinize remarks of a

number of policymakers, especially Chicago Fed President Austan

Goolsbee - a Federal Open Market Committee voting member this

year.

Earnings are also in focus. CoreWeave ( CRWV ), which is

backed by Nvidia ( NVDA ), slumped 12% after the AI data center

operator reported a bigger-than-expected quarterly net loss.

Eyes are also on developments surrounding the China

revenue-sharing deal the U.S. government signed with chipmakers

like Nvidia ( NVDA ) and Advanced Micro Devices ( AMD ), which the White

House said

could be expanded

to others in the sector. Nvidia ( NVDA ) was flat, while Advanced

Micro Devices ( AMD ) rose 5.8%.

Paramount Skydance ( PSKY ) jumped 19% and is up over

24% this week. The company won

exclusive broadcasting rights

to the Ultimate Fighting Championship for seven years

earlier this week.

In geopolitics, Donald Trump and European leaders are

expected to hold a virtual meeting on the Russo-Ukraine

conflict, two days before the U.S. president meets Russian

President Vladimir Putin.

Advancing issues outnumbered decliners by a 3.82-to-1 ratio

on the NYSE and by a 2.45-to-1 ratio on the Nasdaq.

The S&P 500 posted 32 new 52-week highs and two new

lows, while the Nasdaq Composite recorded 110 new highs and 36

new lows.