US Stocks Hit Record Highs Amid Trade Truce and Inflation Data

On August 12, 2025, U.S. stock markets soared to unprecedented levels, driven by a combination of favorable economic indicators and geopolitical developments. Investors responded positively to a better-than-expected inflation report and the extension of the U.S.-China trade truce, propelling major indices to new heights.

Record-Breaking Performance Across Major Indices

The S&P 500 index climbed 1.1%, adding 72.31 points to close at a record 6,445.76. Similarly, the Dow Jones Industrial Average rose 1.1%, gaining 483.52 points to reach 44,458.61. The Nasdaq Composite outperformed, increasing by 1.4% (296.50 points) to hit a new high of 21,681.90. The Russell 2000, representing smaller companies, surged 3% (66.27 points) to 2,282.78. This broad-based rally reflects renewed investor confidence across various sectors and market capitalizations.

Inflation Data Fuels Optimism

The catalyst for this bullish sentiment was a better-than-expected inflation report, suggesting that price pressures may be easing. This development has led to increased speculation that the Federal Reserve might consider cutting interest rates in the near future, potentially as early as September. Lower interest rates typically reduce borrowing costs for businesses and consumers, thereby stimulating economic activity and enhancing corporate profitability.

Extension of U.S.-China Trade Truce

Adding to the positive momentum, President Donald Trump announced a 90-day extension of the trade truce with China. This decision delays the imposition of additional tariffs on Chinese goods, alleviating immediate concerns over escalating trade tensions. The extension provides a window for further negotiations, fostering hope for a more comprehensive trade agreement between the two economic powerhouses.

Presidential Critique of Goldman Sachs

In a notable development, President Trump publicly criticized Goldman Sachs CEO David Solomon and the bank’s economic research team. The President took issue with their analysis, which suggested that U.S. consumers had absorbed 22% of tariffs imposed so far—a figure projected to rise to 67% under current trends. Trump contended that foreign entities primarily bear the tariff costs, disputing Goldman’s findings. He also mocked Solomon’s past DJ hobby and suggested the bank replace its chief economist, Jan Hatzius, who led the analysis. Goldman Sachs and Hatzius declined to comment on the President’s remarks.

Sector Highlights

Technology Stocks Lead the Charge

The technology sector was a significant beneficiary of the day’s rally. Companies like NVIDIA and Advanced Micro Devices (AMD) saw their stock prices rise, buoyed by the prospect of stable trade relations and potential interest rate cuts. However, it’s worth noting that both companies recently agreed to a deal with the U.S. government, wherein they will pay 15% of their revenues from certain chip sales to China in exchange for licenses to sell AI-powered chips in the Chinese market. This arrangement has raised concerns about potential impacts on their profit margins and the precedent it sets for government intervention in critical U.S. exports.

Airlines and Industrials Gain Altitude

Airline stocks also experienced significant gains, reflecting optimism about increased travel demand and economic growth. Industrial and aerospace sectors followed suit, with companies reporting strong earnings and positive outlooks, further bolstering investor confidence.

Conclusion

The convergence of favorable inflation data and the extension of the U.S.-China trade truce has created a buoyant atmosphere in the stock market. While the President’s critique of Goldman Sachs adds an element of controversy, the overall sentiment remains positive. Investors are cautiously optimistic, keeping a close eye on upcoming economic indicators and geopolitical developments that could influence market trajectories in the coming months.

For more detailed information on the market’s performance, you can refer to the Associated Press’s report on how major U.S. stock indexes fared on August 12, 2025. Additionally, Reuters provides insights into President Trump’s rebuke of Goldman Sachs and the bank’s economic research on tariff impact.