After somewhat positive inflation data in July, the chances of the Federal Reserve cutting interest rates in September are at roughly 83%, according to CME Group 's FedWatch tool calculations on Aug. 18. One month earlier, roughly 59% of traders betting on changes in the federal funds rate thought an interest rate cut would occur in September.

The long pause between rate cuts could be particularly bullish for equities, potentially extending and broadening the stock market’s rally, analysts said.

Investors’ expectations of lower interest rates were reflected in the major stock indexes and lower government bond yields.