- The July CPI data released showed a moderate 0.1% monthly rise, which helped US stock indices recover on Wednesday.
- Bond traders are pricing in a 40% chance of a September Fed hike following the CPI data.
- US Treasuries kept gains, with the 2-year yield down 3 basis points to 4.18% and the 10-year yield down to 4.66%.
- US stock indices recovered on Wednesday after official data showed cooled in July, reducing concerns that the Federal Reserve could raise interest rates in the near term.
- As of 10:30 a.m. Eastern Time, the S&P 500 added 0.3%, the Dow Jones Industrial Average was up 0.1%, and the Nasdaq Composite was 0.7% higher.
- Investors had been concerned that persistent inflation could prompt the Fed to raise interest rates in September, potentially creating a headwind for equities.
- According to Adam Sarhan of 50 Park Investments, "This CPI report gives the market and the Fed the chance to take a big sigh of relief, because we're not in the situation where this inflation report is forcing the Fed's hands."
Wall Street's major indices experienced gains on Wednesday, buoyed by a 3.4% year-on-year increase in the Consumer Price Index (CPI) for July, which was slightly lower than June's 3.5%. This data alleviated fears of an imminent interest rate hike by the Federal Reserve, with traders now estimating a 40% chance of a rate increase in September.
In early trading, the Dow Jones Industrial Average rose 0.2% to 53,872.05, while the S&P 500 climbed 0.4% to 7,756.22, and the Nasdaq Composite Index jumped 0.7% to 26,641.91. As of 10:30 a.m. Eastern Time, the S&P 500 was up 0.3%, the Dow Jones was up 0.1%, and the Nasdaq was 0.7% higher.
Adam Sarhan of 50 Park Investments noted, "This CPI report gives the market and the Fed the chance to take a big sigh of relief, because we're not in the situation where this inflation report is forcing the Fed's hands." The report has provided a temporary reprieve for investors, who had been concerned about persistent inflation potentially prompting the Fed to raise interest rates, which could hinder equity performance.
In addition to the broader market movements, several stocks in the AI and semiconductor sectors saw significant gains. CoreWeave shares surged 22% after reporting quarterly revenue of $2.6 billion, while Nvidia gained 2% and Micron Technology climbed 4.4%. Other notable performers included Super Micro Computer, which soared 17% after projecting fiscal 2027 revenue above Wall Street expectations.
“The tame inflation reading eased concerns about a near-term rate increase, with the 2-year Treasury yield falling three basis points to 4.18% and the 10-year yield down to 4.66% ahead of a $42 billion auction. AI-related stocks rallied, with CoreWeave jumping 22% on $2.6 billion quarterly revenue.”
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