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

(Bloomberg) — An in-line inflation reading spurred gains in both stocks and bonds, easing concern about imminent Federal Reserve interest-rate increases despite elevated oil prices.

The data brought relief to Wall Street traders worried about ongoing geopolitical risks, with the S&P 500 hovering near all-time highs. A rally in technology companies also helped sentiment, driving Nasdaq 100 up about 1%. Treasury two-year yields fell four basis points to 4.17%. Money markets trimmed bets on a September Fed hike.

The consumer price index, excluding often-volatile food and energy categories, increased 0.2% from a month earlier. On an annual basis, it advanced 2.5%, matching the slowest pace since March 2021. Overall, inflation rose 0.1% from the prior month and 3.4% from a year earlier.

In the wake of Friday’s weak July jobs report, the moderation in price growth may help alleviate some of the inflation anxiety at the Fed after three officials dissented on July 29 in favor of raising interest rates.

“The big surprise with a report that had no surprises is that a situation where inflation isn’t reaccelerating, coupled with the most recent, weak jobs report gives the Fed more time to wait,” said Chris Zaccarelli at Northlight Asset Management.

Typically, the market would be buoyed by the thought of rate cuts, but in a world where many are expecting rate hikes, anything that can delay – or squash the need for – rate hikes will be viewed positively, he added.

While there will be another round of inflation data before the September Fed meeting, unless those numbers tell a much different story, officials will likely still be in a position to leave rates unchanged, noted Ellen Zentner at Morgan Stanley Wealth Management.

“Contained core inflation adds to the encouraging signs in last month’s release of a moderation in underlying inflation, helping strengthen the case for a September hold,” said Lindsay Rosner at Goldman Sachs Asset Management.

Economic data has taken on renewed importance as Fed Chairman Kevin Warsh seeks to make the central bank less forthcoming about its policy intentions, breaking with recent tradition of signaling moves ahead of official decisions. Long-dated Treasury yields surged to the highest levels in almost two decades after the Fed held interest rates last month.

“Wednesday’s CPI was in-line with expectations, which is welcome news, but it is becoming clear that the CPI data is moving in lockstep with oil prices, and the Federal Reserve has no control over the Strait of Hormuz, and this paints a long and unknown road for inflation to get back towards the 2% target,” said Skyler Weinand at Regan Capital.

Corporate Highlights:

Super Micro Computer Inc. gave a revenue forecast for the current quarter that topped analysts’ estimates, a sign the booming AI market continues to bolster sales of the company’s servers. CoreWeave Inc., a provider of computing that powers AI systems, topped analysts’ estimates for second-quarter sales after signing up more customers. Cava Group Inc.’s sales rose faster than expected as the restaurant chain’s salmon and pita chips drew in diners, showing that Americans are willing to spend when cost and taste converge. Nebius Group NV reported a 514% jump in second-quarter sales for its cloud business following strong demand for AI computing power. Tencent Holdings Ltd.’s revenue grew a faster-than-projected 11%, keeping up the steady pace of expansion it needs to finance a costly AI services and infrastructure buildout. Some of the main moves in markets:

Stocks

The S&P 500 rose 0.3% as of 9:32 a.m. New York time The Nasdaq 100 rose 0.9% The Dow Jones Industrial Average was little changed The Stoxx Europe 600 was little changed The MSCI World Index rose 0.3% Currencies

The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.1% to $1.1555 The British pound rose 0.2% to $1.3531 The Japanese yen rose 0.3% to 158.87 per dollar Cryptocurrencies

Bitcoin rose 0.4% to $63,943.01 Ether rose 1.3% to $1,905.71 Bonds

The yield on 10-year Treasuries declined three basis points to 4.66% Germany’s 10-year yield declined three basis points to 3.13% Britain’s 10-year yield declined three basis points to 4.94% Commodities

West Texas Intermediate crude fell 0.3% to $82.95 a barrel Spot gold rose 1.1% to $4,417.81 an ounce ©2026 Bloomberg L.P.