The financial world breathed a collective sigh of relief as stock markets hit record highs, driven by encouraging inflation data that suggests potential economic stabilization.

Investors and economists are closely watching the latest economic indicators, which show a slightly less painful inflation landscape than previously anticipated. The S&P 500 rose 0.8%, setting a new all-time high, while the Dow Jones Industrial Average and Nasdaq composite also climbed, marking significant milestones for the market.

Crucial to these developments is the potential impact on lower and middle-income households struggling with persistent price increases. The data could signal a potential shift in Federal Reserve monetary policy, with traders increasingly betting on interest rate cuts in upcoming meetings.

Brian Jacobsen, chief economist at Annex Wealth Management, noted that “Fed officials are more concerned about the labor market than inflation right now,” suggesting a nuanced approach to economic management.

Companies like Ford and Intel reported stronger-than-expected quarterly profits, contributing to market optimism. Ford’s stock jumped 12.2%, while Intel highlighted the growing influence of artificial intelligence in driving technological investment.

The tech sector saw notable movement, with Google’s parent company Alphabet experiencing growth following an expansion announcement by Anthropic involving Google’s cloud technologies.

While the economic outlook appears promising, challenges remain. The U.S. national debt recently surpassed $38 trillion, raising concerns about potential long-term inflationary pressures.

Global markets reflected this positive sentiment, with significant gains in Asian markets like South Korea’s Kospi and Japan’s Nikkei 225. Bond markets also showed stability, with the 10-year Treasury yield experiencing minimal fluctuation.

As the economic landscape continues to evolve, investors and economists remain cautiously optimistic about the potential for sustained growth and stabilization.