Stocks Pare Losses After Tame Inflation Report: Markets Wrap
(Bloomberg) — A relatively tame inflation report brought a degree of relief to Wall Street, with stocks paring losses on hopes that Federal Reserve officials will hold off on raising interest rates.
The tech-led slide in equity futures waned after data showed that while consumer prices accelerated as the Iran war pushed up energy costs, a gauge of underlying inflation rose by less than forecast. Treasuries and the dollar wavered. Oil rose as President Donald Trump slammed Iran for not reaching a quick peace deal with the US after a night of attacks that have strained a fragile truce.
The consumer price index climbed 4.2% from a year earlier, the most since early 2023. The core gauge, which excludes food and energy, increased 0.2% from April and 2.9% from a year earlier. Despite an energy-fueled jump in the overall CPI, the details of the report painted a milder picture, providing a welcome signal to Fed policymakers.
“Overall, while the pace of headline inflation was driven higher by gasoline and energy prices, the core figures were benign — suggesting that the Fed has plenty of capacity for patience during the next several meetings,” said Ian Lyngen at BMO Capital Markets.
With core measures suggesting more limited price increases and much of the upside coming from oil, the CPI release suggests that inflationary pressures stemming from the oil price shock have remained manageable for the US economy so far, according to Josh Jamner at ClearBridge Investments.
“Cooler core inflation is an encouraging sign for investors, suggesting less of a need for the Federal Reserve to raise interest rates if inflationary pressures stay more contained than previously expected,” he said.
“The tentative conclusion is that energy is not bleeding into core items. Or at least the leakage is being offset by tariffs passing through,” said Brad Conger at Hirtle & Co. “This news should pacify the hawks on the FOMC.”
Now if if the Strait of Hormuz remains disrupted through the Labor Day weekend, we would expect the energy shock to affect additional sectors and heighten uncertainty about the future path of monetary policy, according to Jeffrey Roach at LPL Financial.
“Rate expectations could be further upended if this crisis lasts throughout the summer,” he said. “For next week, expect the Fed to remain on hold while removing any bias toward additional easing.”
Corporate Highlights:
The rally in artificial intelligence-related stocks is suddenly on shaky footing, and Oracle Corp.’s earnings report after the close represents the group’s next test. Alphabet Inc.’s Google pitched major news outlets, including the Washington Post, NPR and People Inc., on an AI tool that summarizes news articles earlier this year, but the reception was cool. Super Micro Computer Inc. plans to raise $7 billion through a package of equity offerings to purchase the components needed to fulfill customers’ orders for the company’s artificial intelligence servers. Taiwan Semiconductor Manufacturing Co. reported a 30% rise in its monthly sales, reflecting continued strength in demand spurred by a global rush to build AI infrastructure. Shares of several large trucking companies plunged after Amazon.com Inc. announced an expansion of its shipping service that has already shaken the transportation and logistics sector and unsettled investors. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.6% as of 9:05 a.m. New York time Nasdaq 100 futures fell 0.9% Futures on the Dow Jones Industrial Average fell 0.6% The Stoxx Europe 600 fell 0.2% The MSCI World Index fell 0.1% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1550 The British pound was little changed at $1.3393 The Japanese yen was little changed at 160.44 per dollar Cryptocurrencies
Bitcoin fell 1% to $61,484.81 Ether fell 1.6% to $1,633.79 Bonds
The yield on 10-year Treasuries advanced one basis point to 4.53% Germany’s 10-year yield advanced two basis points to 3.07% Britain’s 10-year yield advanced two basis points to 4.92% Commodities
West Texas Intermediate crude rose 1.6% to $89.60 a barrel Spot gold fell 2.5% to $4,152.74 an ounce ©2026 Bloomberg L.P.
