Fed, inflation and CPI
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The Bureau of Labor Statistics reported that the consumer price index (CPI), a popular inflation gauge, increased in June to 2.7% on an annual basis as prices rose for consumers.
Stocks tiptoed toward fresh highs, then got cold feet. A glimmer of hope from Nvidia’s China chip sales briefly lit the room, but cooler-than-hoped inflation doused the mood.
The Consumer Price Index in June rose 2.7% on an annual basis, a sign inflation around the U.S. is creeping up after declining earlier this year.
Both the S&P 500 (.SPX) and Nasdaq (.IXIC) - and by extension, MSCI's world equities index (.MIWD00000PUS) - retreated from record peaks after traders shaved back bets of U.S. rate cuts this year as prices rose for things such as coffee and couches, while staying steady for tariff-exempted (for now) items such as cars.
Initial early gains following the June data were reversed as pass-through effects from tariffs stoke concerns.
The CPI rose 0.3% month-over-month in June, accelerating from May’s 0.1% pace. Year-over-year inflation also jumped to 2.7%, up from 2.4% in May. Core CPI, which excludes food and energy, rose 0.2% in June and came in at 2.9% annually — signs that underlying inflationary pressure remains sticky.
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Investor's Business Daily on MSNCPI Inflation Due; Tariff Escalation, Bid To Oust Fed Chief Powell Raise S&P 500 Stakes (Live Coverage)The consumer price index for June is expected to show that Trump tariffs began to nudge inflation higher last month.
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The next CPI report, which will be released ahead of the market open on Tuesday, July 15, will certainly factor into the central bank's thinking. Goldman Sachs economists expect headline CPI to rise 0.3% month over month, reflecting higher food and energy prices. This compares to the 0.1% increase seen in the May CPI.