Futures were up before the July CPI and then trimmed their gains once the numbers were out, with Dow Jones, Nasdaq and S&P 500 watchers still fixated on the Fed. The in-line inflation data did not put an end to rate worries but it eased them, while the tech sector was buoyed by earnings from the AI side of the house.
Inflation lands in line, policy debate stays open
The Consumer Price Index was up 3.4% over the year in July according to a Labor Department report, right where economists had it. On a month-to-month basis the figure was 0.1%, no surprise there either.
Prior to the release the CME FedWatch Tool showed markets divided between a 25-basis-point September hike or a standstill. In the wake of the data, traders have kept their bets narrow for a hold; futures are pricing in roughly a 55% probability of the Fed leaving things at 3.50%-3.75% on the 15-16th.
The dollar lost some of its luster following the CPI print. Currency markets responded to the in-line data with the yen edging up 0.21% to 158.93 to the dollar.
AI infrastructure rallies, shaping index leadership
It is the AI infrastructure plays that are setting the tone for risk appetite. IREN and Applied Digital were each up over 5%, Nebius Group 9.5% and Super Micro Computer 9.2% having put forward fiscal 2027 revenue numbers that beat Wall Street.
CoreWeave was 18.2% higher in premarket after it raised its capital spending outlook and topped Q2 estimates. The firm also put in a 5% adjusted operating income margin for the quarter.
At 7 a.m. ET the Dow E-minis were 59 points or 0.11% in the black, with the S&P 500 E-minis adding 19.25 (0.25%) and the Nasdaq 100 E-minis 196.75 (0.65%). A later look had S&P 500 and Nasdaq-100 futures up 0.3% and 0.7% respectively, and the Dow 78 points or 0.1% better.
Energy jitters complicate the inflation picture
With supply risks in play oil has been on the advance. Brent was $89.26 a barrel by 1219 GMT, up 35 cents or 0.4% and on for a sixth day of gains. U.S. West Texas Intermediate was 57 cents or 0.7% higher at $83.77, looking for a fifth straight session of positive action.
That kind of bid comes on the heels of two ship attacks stoking fears of Middle East disruption and with Iran war talks at an impasse. High energy costs are a given when it comes to inflation and rate expectations.
Why this matters for Dow and Nasdaq positioning
The Fed has cover to hold with this CPI, if not absolute certainty. The fact that there is only a 55% tilt toward a pause is a reminder of how fast wage and energy figures can change the course. At present, AI-linked earnings are providing a cushion for growth stocks against macro headwinds.
Earnings are part of the equation. As the season winds down investors will be looking for word from Cisco Systems, Coherent Corp, Cerebras Systems and Nebius Group.
What investors are tracking next
A few key markers for the US market today:
– July CPI at 3.4% year on year, as forecast
– 0.1% monthly increase in CPI, in line with calls
– About a 55% chance of a September hold priced in
– Rate band left unchanged at 3.50%-3.75%
– Momentum in AI infrastructure on the back of good guidance
– Waiting on results from Cisco and the like
The road ahead
Today’s inflation number is all the more important in light of a softer-than-anticipated jobs report last week. With the CPI exactly as scripted and oil firming up, the Fed has some room to manoeuvre but no easy answers. For the trader, it is the AI infrastructure that is leading, while the breadth of the Dow and S&P will depend on whether the pressure from energy eases or holds firm.
