- US consumer prices rose 0.1% in July, matching expectations, according to the CPI report released by the Bureau of Labor Statistics.
- Core CPI increased 0.2% month over month, indicating a steady rise in prices excluding food and energy categories.
- Annual inflation advanced to 2.5%, reflecting a slowdown in price increases compared to previous months.
- Stocks closed higher for the first time in three sessions, boosted by the tame inflation report.
- Traders pared expectations for a September rate hike following the inflation data release.
- Stock futures were little changed as traders awaited more inflation data and assessed corporate earnings.
- PPI report is due Thursday, which will gauge what wholesalers pay for raw goods and materials.
- Retail sales data is expected on Friday, with economists predicting a growth of just 0.1% for July.
US consumer prices rose 0.1% in July, matching economist expectations, while annual inflation slowed to 2.5%, according to the Bureau of Labor Statistics. This report has led traders to pare back their expectations for a rate hike in September, with many now anticipating potential increases in October or December.1
The consumer price index (CPI) data showed that prices, excluding volatile food and energy categories, increased by 0.2%. The inflation figures suggest a stabilizing economy, which could instill hope among investors. “Still, the odds favor a rate increase in either October or December,” said José Torres, senior economist at Interactive Brokers, indicating that the Federal Reserve is likely to take a cautious approach in assessing economic conditions before making further monetary policy adjustments.
As traders awaited more inflation data and fresh earnings reports, stock futures remained little changed. The upcoming producer price index (PPI) report, set for release Thursday, is expected to show an increase of 0.2% from the prior month, according to economists polled by Dow Jones. This data will be crucial for understanding the broader economic landscape and potential impacts on monetary policy moving forward.
Investors are also looking forward to July retail sales data, with expectations of just 0.1% growth last month, which could further influence market sentiment and Federal Reserve decisions.89
“The tame CPI reading gave stocks a boost, with the benchmark closing higher for the first time in three sessions. Investors now look to Thursday's PPI report, expected to show a 0.2% monthly increase, and Friday's retail sales data, with economists forecasting just 0.1% growth.”
CNBC
