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August 12, 2026 - 15:57
5 minutes
(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 giant chipmakers also helped sentiment, driving the 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% in July 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.Although inflation remains elevated, today’s CPI report should give investors greater confidence that peak inflation appears to be behind us, according to Bret Kenwell at eToro. At the same time, disappointing jobs and gross domestic product data have investors debating how much urgency the Fed actually faces to raise rates, he added.“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.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.“Today’s CPI print, alongside July’s drop in payrolls, should lower expectations for a September hike, but does not put it completely to bed,” said Seema Shah at Principal Asset Management. “Unless August’s inflation print also shows subdued price pressures, a September hike is a clear risk.”With the Strait of Hormuz still shut, upside inflation risks will remain top of mind for the foreseeable future, she added.Corporate Highlights:Super Micro Computer Inc. gave a revenue forecast for the current quarter that topped analysts’ estimates, a sign the booming artificial-intelligence 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. more than doubled spending on AI projects and computing to about $7.8 billion last quarter, reflecting the gaming and social media leader’s intensifying efforts to catch up in a critical sphere with rivals like Alibaba Group Holding Ltd. Some of the main moves in markets:StocksThe S&P 500 rose 0.2% as of 9:56 a.m. New York time The Nasdaq 100 rose 0.8% The Dow Jones Industrial Average was little changed The Stoxx Europe 600 was little changed The MSCI World Index rose 0.3% CurrenciesThe Bloomberg Dollar Spot Index fell 0.1% The euro was little changed at $1.1553 The British pound rose 0.1% to $1.3526 The Japanese yen rose 0.2% to 158.98 per dollar CryptocurrenciesBitcoin rose 0.2% to $63,826.4 Ether rose 1% to $1,899.31 BondsThe yield on 10-year Treasuries declined three basis points to 4.66% Germany’s 10-year yield declined two basis points to 3.14% Britain’s 10-year yield declined two basis points to 4.95% CommoditiesWest Texas Intermediate crude fell 0.7% to $82.61 a barrel Spot gold rose 1.4% to $4,429.21 an ounce ©2026 Bloomberg L.P.
