Today, Trump’s focus on tariffs hasn’t abated — but he has dialed back the more maximalist tariff levels he initially outlined. Combined with signs of a shakier labor market, investors are more convinced that the Fed will err on the side of supporting the economy by lowering interest rates to support overall business activity.

Consumer prices rose 2.7% in July compared to a year ago, clocking in lower than economists expected and holding steady from the previous month. The reading defied fears of further price increases as result of President Donald Trump's tariffs.

A gauge of underlying inflation in July showed prices increasing at the fastest annual pace in five months, a sign that businesses are passing along tariff-related costs to customers.