U.S. stocks still closed higher in August, viewing concerns about Federal Reserve independence as tomorrow's concern

In August, when economists were baffled by Trump's incessant escalating pressure on the Federal Reserve, U.S. markets sent a different message: Let the good times come. On Friday, artificial intelligence-related stocks suffered a sell-off ahead of the long weekend, but that wasn't enough to affect the stock market's monthly rally. The S & P 500 rose 1.9% in August, while the Nasdaq rose 1.6%. The Dow rose 3.2%. Weak economic data and the modest impact of tariffs on prices so far have given investors more confidence that the Fed will cut interest rates at next month's meeting. Meanwhile, Trump's efforts to get Fed officials to support low interest rates have fueled hopes that further rate cuts may be on the horizon. Economists warn that a Federal Reserve more vulnerable to White House influence is more likely to cut interest rates too far, ultimately driving up inflation. If August's performance is any indication, the stock market views that possibility as a worry for tomorrow.