US stocks rose on Friday as investors increased bets that the Federal Reserve could cut interest rates in September. The move helped push the S&P 500 and Nasdaq to record highs, reflecting optimism that borrowing costs may soon ease.

Market participants have been closely watching signals from the central bank as inflation data, growth trends, and labor market resilience continue to shape expectations. A rate cut would typically support valuations by lowering financing costs and making equities more attractive relative to other assets.

The rally also underscores how strongly investors are responding to shifts in monetary policy expectations. Even without a confirmed move from the Fed, traders are positioning for a more accommodative stance later in the year.

While the outlook remains dependent on incoming economic data, Friday’s gains showed that Wall Street is still highly sensitive to any signs that the Fed may begin loosening policy in the months ahead.