Last night, the three major U.S. stock indices once again hit record highs, with the S&P 500 and the Nasdaq Composite extending their gains and both setting new closing records. The core driver of this rally remains the market's strong expectations for an imminent Fed rate cut.

U.S. Treasury Secretary Besant publicly stated that current interest rates should be 150-175 basis points lower than the current level and emphasized that "a 50-basis-point rate cut in September is highly likely," which could mark the beginning of a series of Fed rate cuts. The key catalyst for this renewed expectation of rate cuts stems from several recently released critical data points—May's non-farm payroll data was significantly revised downward, showing clear signs of cooling in the labor market.

U.S. stocks are likely to continue rising on this momentum in the near term, with the key to future trends hinging on the magnitude of the rate cuts. If the cuts are substantial enough, U.S. stocks may open up further upside potential.

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