Stocks Rise as Inflation Data Outweighs Chip Rout: Markets Wrap

(Bloomberg) — Another report showing softer-than-anticipated inflation drove stocks and bonds higher as Wall Street further dialed back wagers on Federal Reserve interest-rate increases this year.

The limited fallout from the Iran war on prices bolstered the view that the Fed will have more room to postpone any potential tightening move, with money markets now only fully pricing in a hike by December. Short-dated Treasuries outperformed the rest of the curve. The S&P 500 saw a second straight day of gains, though chipmakers retreated.

A decline in energy costs helped keep inflation pressures in check last month, with the core producer price index rising 4.7% from a year earlier, below the median estimate in a Bloomberg survey.

“It appears that the 2026 inflation resumption crested last month and headed back to its pre-conflict trend lower,” said Jamie Cox at Harris Financial Group. “This really helps the Fed avoid the mistake of hiking rates into a supply shock.”

A rally in oil faded on Wednesday, but prices remained volatile as the US launched fresh strikes on Iran in response to a spate of attacks on shipping that threaten crucial energy flows through the Strait of Hormuz.

“There’s no near-term pressure on the Fed, but oil is in the driver’s seat over the longer term,” said David Russell at TradeStation. “Energy saved the day in June, but that might become ancient history if the Strait of Hormuz doesn’t open soon.”

Meantime, Fed Chairman Kevin Warsh pushed back on commentary that surging investment into artificial intelligence is stoking inflation, saying the boom won’t necessarily lead to persistent price pressures.

In an exchange with lawmakers on the impact of the boom, Warsh acknowledged that AI investment is already raising the prices of some goods and he repeated a vow to curb overall inflation. But he said higher prices in the near term are not necessarily inflationary, and the Fed’s policymakers will debate how long lasting that proves to be.

Inflation should continue moderating over the second half of the year, although the path is unlikely to be perfectly smooth, according to Charlie Anderson at UBS Wealth Management.

“That gives the Fed flexibility to remain patient,” he said. “Markets may be pricing in a more hawkish outcome than ultimately materializes if inflation continues to trend in the right direction.”

Corporate Highlights:

Anthropic PBC is seeking to meet with investors ahead of its potential mega-IPO, according to people familiar with the matter, as the company prepares to join the rush of artificial intelligence-driven stock market debuts. Apple Inc. received long-awaited government approval to roll out Apple Intelligence in China, potentially giving it a boost in the world’s most-competitive smartphone market. Morgan Stanley’s stock traders sailed past Wall Street’s expectations to set another quarterly record, adding to the industry’s second-quarter windfall from buoyant markets and ongoing volatility. Larry Fink’s plan to combine BlackRock Inc.’s significant index fund business with higher-fee active and private markets investments is bearing fruit, with revenue jumping and the firm’s assets hitting a record $15.3 trillion. Payment processing firm Stripe Inc. and private equity firm Advent International offered to buy fintech pioneer PayPal Holdings Inc. for more than $50 billion, according to people familiar with the matter. Some of the main moves in markets:

Stocks

The S&P 500 rose 0.3% as of 1:53 p.m. New York time The Nasdaq 100 fell 0.3% The Dow Jones Industrial Average rose 0.3% The MSCI World Index rose 0.4% Philadelphia Stock Exchange Semiconductor Index fell 2.4% Currencies

The Bloomberg Dollar Spot Index fell 0.4% The euro rose 0.5% to $1.1472 The British pound rose 1.2% to $1.3547 The Japanese yen rose 0.2% to 162.00 per dollar Cryptocurrencies

Bitcoin rose 0.7% to $64,997.54 Ether rose 2.8% to $1,926.4 Bonds

The yield on 10-year Treasuries declined five basis points to 4.54% Germany’s 10-year yield was little changed at 3.12% Britain’s 10-year yield declined four basis points to 4.94% Commodities

West Texas Intermediate crude fell 0.4% to $79 a barrel Spot gold rose 0.3% to $4,063.63 an ounce ©2026 Bloomberg L.P.