Stocks, Bonds Rise as Soft CPI Curbs Fed-Hike Bets: Markets Wrap

(Bloomberg) — A cooler-than-estimated inflation reading spurred gains in both stocks and bonds, easing concern about imminent Federal Reserve interest-rate hikes despite a resurgence in oil prices.

The data brought some relief to Wall Street traders worried about a flare-up in geopolitical threats, with the S&P 500 extending this month’s advance. At the start of the earnings season, big banks posted solid results. A rally in chipmakers also helped sentiment, driving the Nasdaq 100 up 1.1%. That’s even as International Business Machines Corp. sank 25% on a sales miss.

Short-dated Treasuries outperformed as money markets unwound bets the Fed could boost rates in July. The dollar fell. US crude rose, but settled below $80 as President Donald Trump backed away from a plan to impose a fee on Strait of Hormuz shipments.

Consumer prices dropped in June for the first time in six years and a key gauge of underlying inflation was little changed. Fed officials will likely welcome the data ahead of their upcoming meeting even as hostilities in the Persian Gulf risk prolonging the fallout from the conflict.

“Softer than expected CPI is a big relief,” said Tiffany Wilding at Pacific Investment Management Co. “While today’s report will not eliminate discussion of further tightening entirely, it should effectively remove a July rate hike from consideration.”

In testimony before US lawmakers, Fed Chairman Kevin Warsh said central bank officials have no tolerance for high inflation, reiterating a vow to tame price growth.

“Warsh reinforced the Fed’s inflation-fighting credibility without committing policymakers to a particular course before additional economic data become available,” according to Brian Therien at Edward Jones.

Policymakers will continue to monitor incoming data closely, said Wilding. Nevertheless, the latest CPI is an important step toward validating bets that inflation will likely cool in the second half of the year, she added. That supports her view the Fed will remain on hold through 2026.

The CPI likely lowers pressure on the Fed to hike soon, but hostilities in Iran mean the prospect of hikes is far from over, noted Kay Haigh at Goldman Sachs Asset Management. While a path remains for rates to stay unchanged this year, the re-escalation of the conflict has narrowed it, he said.

“Today’s report provides breathing room, not an all-clear,” noted Bret Kenwell at eToro. “While inflation has cooled, it has not disappeared.”

Corporate Highlights:

JPMorgan Chase & Co. saw its highest quarterly profit ever as stock traders blew past estimates and a long-held Visa Inc. stake paid off to the tune of $4.6 billion. Goldman Sachs Group Inc. trounced its own Wall Street stock-trading records, posting $7.42 billion for a quarter that saw indexes rip higher and market volatility. Bank of America Corp.’s stock traders notched a record during the second quarter while its investment bankers capitalized on a dealmaking resurgence. Wells Fargo & Co. reported earnings that beat estimates on higher fees from wealth management and investment banking. A slew of Citigroup Inc.’s key business lines surpassed expectations, although the bank’s record haul in stock trading fell short of the growth posted by rivals. What Bloomberg Strategists say…

“CPI came in softer than forecasted, taking the attention of the two main macro pressures that had dominated the tape over the last week — higher oil prices and a rising probability of a July Fed hike — and shifting the focus back to the micro in individual earnings.”

—Michael Ball, Macro Strategist, Markets Live. For the full analysis, click here.

Some of the main moves in markets:

Stocks

The S&P 500 rose 0.4% as of 4 p.m. New York time The Nasdaq 100 rose 1.1% The Dow Jones Industrial Average was little changed The MSCI World Index rose 0.4% Currencies

The Bloomberg Dollar Spot Index fell 0.4% The euro rose 0.3% to $1.1419 The British pound rose 0.3% to $1.3387 The Japanese yen rose 0.1% to 162.22 per dollar Cryptocurrencies

Bitcoin rose 3.8% to $64,485.22 Ether rose 6.2% to $1,875.6 Bonds

The yield on 10-year Treasuries declined four basis points to 4.58% Germany’s 10-year yield was little changed at 3.11% Britain’s 10-year yield was little changed at 4.98% Commodities

West Texas Intermediate crude rose 2.1% to $79.79 a barrel Spot gold rose 1.3% to $4,055.36 an ounce ©2026 Bloomberg L.P.