U.S. stock indexes rose on Tuesday as rising expectations of a rate cut in September lifted Wall Street ahead of Federal Reserve Chairman Jerome Powell’s testimony.

The S&P 500 and Nasdaq Composite hit record highs on Monday, adding to recent gains as traders priced in the likelihood that the Federal Reserve will begin cutting interest rates in September. The Dow Jones index lagged behind, down 0.1%.

Powell’s testimony in the spotlight

Powell is set to begin his two-day testimony before Congress, starting later Tuesday with the Senate and the House on Wednesday.

The Fed chairman is expected to provide more clues about monetary policy, with markets on the lookout for any bearish cues, mainly in the wake of weaker inflation and labor data in recent weeks.

In addition to Powell’s testimony, other Fed officials will also have their say this week, including open market committee members Raphael Bostic and Michelle Bowman.

Investors will also be watching key June consumer price index inflation data due Thursday for more signals about the path of inflation. The Fed has repeatedly signaled that it needs more confidence that inflation is easing before it begins to cut interest rates.

CME’s FedWatch tool indicates that traders estimate the probability of a 25 basis point cut in September at more than 70%, compared to 59% last week.

Earnings season starts with banks

This week, the focus will also be on the second-quarter earnings season, which will start with the results of the major banks at the end of the week.

JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) will report their quarterly results on Friday. PepsiCo (PEP) and Delta Air Lines (DAL) will also release their results this week. Meanwhile, Fisker (FSRNQ) is recalling 7,545 Ocean electric SUVs because of a problem with a water pump that could cause a loss of power, the National Highway Traffic Safety Administration said. 

Oil prices fall after Beryl

Crude oil prices fell Tuesday after Hurricane Beryl caused less damage than expected in a region critical to U.S. oil production, easing concerns about supply disruption.

Market participants remain attentive to the situation in the Middle East, as expectations of a possible ceasefire agreement in Gaza, which would reduce concerns about global crude supply disruption, weighed on crude oil prices on Monday. The American Petroleum Institute will release its weekly crude oil inventory estimates later in the session, and a drawdown is anticipated given the summer driving season.