Wall Street surged today with the Dow Jones crossing the 46,000 mark for the first time. That milestone reflected more than just momentum, it spoke to a changing economic story. Soft jobless claims and cooling producer inflation have traders increasingly confident that the Federal Reserve will lower interest rates when it meets later this month.

The data showed initial jobless claims jumped to 263,000 in the latest week, the highest level in nearly four years. That alarmed many, especially when tinier signs started appearing that inflation may be persisting rather than falling. Core inflation still sits above 3 percent annually, driven by pressures in shelter, food, and areas hit by tariffs. Despite that, today’s market reaction was clear: the labor market weakening is now louder than inflation worries.

Major stock indexes followed through with gains. The S&P 500 rose by nearly one percent and closed at a new record. The Nasdaq climbed similarly while smaller companies also joined the rally, though not quite as strongly. Yields on U.S. Treasuries fell, especially on the longer end, as investors repositioned for rate cuts that look increasingly likely when the Fed meets on September 17.

The International Monetary Fund weighed in, saying that the Fed has room to ease given signs of labor market softening. That gave traders outside confirmation that their rate cut expectations are grounded in more than just hope. Pulling that together with shrinking wholesale pressure and rising unemployment claims, markets appear to be betting on a softer landing: one where policy eases before the economy rolls over sharply.

Still, the path forward isn’t free from risk. Inflation remains stubborn, especially in areas shielded from seasonal noise. Tariff-driven input costs are still a wildcard. If inflation flares unexpectedly, the Fed could delay or temper its easing. But for today, optimism ruled: the view now is that rate cuts are not just possible, they may be coming.

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