It's Wednesday, and the market is feeling a bit more optimistic. After a rough Tuesday, U.S. stock futures are pointing higher, and the reason is pretty straightforward: the July Consumer Price Index (CPI) came in exactly as economists expected. No nasty surprises, no upside shock. Just a nice, boring, in-line inflation print.
The headline CPI rose 0.1% month-over-month and 3.4% on an annualized basis. Core CPI, which strips out the volatile food and energy components, also matched projections with a 0.2% monthly increase and a 2.5% year-over-year advance. The main driver? Shelter costs, which rose 0.1% and accounted for roughly two-thirds of the headline monthly gain. That was partially offset by a 1.5% drop in energy prices, which helped keep the overall number muted.
But it's not all smooth sailing. Geopolitical tensions are simmering. According to Reuters, there have been renewed attacks on shipping in the Gulf of Oman and the Red Sea, and Iran has declared that the Strait of Hormuz will remain closed. That's a pretty big deal for oil markets and inflation expectations, and it's signaling a widening impasse in war negotiations.
On the bond side, the 10-year Treasury yield is at 4.68%, while the two-year sits at 4.21%. The CME Group's FedWatch tool shows that markets are pricing in a 48.1% likelihood of the Federal Reserve hiking interest rates at its September meeting. So, the possibility of a hike is very much on the table.
Here's a quick look at how the major indices are performing in premarket trading:
The SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust ETF (QQQ), which track the S&P 500 and Nasdaq 100, respectively, were both higher in premarket. SPY was up 0.18% at $771.91, while QQQ advanced 0.65% to $723.15.
Stocks In Focus
CoreWeave
CoreWeave Inc. (CRWV) surged 17.25% after reporting better-than-expected second-quarter financial results. The company posted an adjusted loss of $1.03 per share, beating estimates for a loss of $1.22 per share. Revenue came in at $2.58 billion, also ahead of the $2.56 billion analysts were looking for. Despite the strong earnings reaction, the stock's price trend is considered weak in the short, long, and medium terms, according to MarketDash's Edge Stock Rankings.
Super Micro Computer
Super Micro Computer Inc. (SMCI) jumped 9.49% after reporting fourth-quarter earnings and issuing strong first-quarter guidance. The stock's price trend is strong in the short and medium terms but weak in the long term, with a good value score, according to the rankings.
Lumentum Holdings
Lumentum Holdings Inc. (LITE) gained 7.48% after reporting fourth-quarter revenue of $1.01 billion and earnings of $3.23 per share, beating analyst estimates on both metrics. Revenue more than doubled from $480.7 million a year earlier, driven by growing demand for optical connectivity as AI workloads expand. The stock's price trend is weak in the short and medium terms but strong in the long term, with a poor growth score.
Nebius Group
Nebius Group N.V. (NBIS) was up 9.22% as Wall Street consensus estimates project revenue of $576.7 million and a non-GAAP EPS loss of $0.82. The stock maintains a strong price trend in the long term but a weak trend in the short and medium terms, with a poor value score.
Cisco Systems
Cisco Systems Inc. (CSCO) shares rose 1.24% ahead of its earnings, which are scheduled for release after the closing bell. Analysts expect quarterly earnings of $1.17 per share on revenue of $16.82 billion. The stock maintains a strong price trend in the short, long, and medium terms, with a good quality score.
Cues From Last Session
Tuesday was a mixed bag. Energy and utilities stocks bucked the trend and finished higher, but consumer discretionary, real estate, and communication services recorded the steepest drops. With most S&P 500 sectors ending in negative territory, tech losses pulled U.S. stocks down for a second consecutive session.
Insights From Analysts
Dean Chen, an analyst, sees the U.S. economy facing a complex dilemma. He notes that "weakening employment conditions" conflict with "persistent inflation and energy supply risks," which severely narrows the Federal Reserve's policy flexibility.
Chen highlights that declining global oil inventories and shipping disruptions through the Strait of Hormuz create "additional uncertainty for the inflation outlook," complicating the Fed's path toward monetary easing.
For the U.S. stock market and broader financial assets, Chen expects high interest rates to remain a key headwind. He notes that "the central issue remains the actual cost of capital," warning that elevated capital costs continue to place sustained pressure on "global liquidity conditions" and "risk asset valuations."
Chen outlines two primary market scenarios tied to upcoming economic indicators. If CPI shows stronger-than-expected persistence, "markets may increase expectations for a September rate hike." Alternatively, if price pressures moderate, the Fed may "maintain its current policy framework while waiting for additional economic data." Ultimately, Chen foresees markets remaining "highly sensitive to incoming inflation data, Federal Reserve communication, and changes in global capital costs."
Upcoming Economic Data
Here's what investors will be keeping an eye on Wednesday:
- July CPI Overview: Headline CPI rose 0.1% month-over-month (3.4% YoY), while Core CPI increased 0.2% (2.5% YoY), both matching pre-release estimates. Shelter increases (+0.1%) accounted for roughly two-thirds of the headline monthly gain, offsetting a 1.5% drop in energy index costs.
- July's monthly Treasury balance data will be out by 2:00 p.m. ET.
Commodities, Crypto, And Global Equity Markets
Crude Oil WTI futures were trading higher in the early New York session, up 0.31% to hover around $83.46 per barrel.
Gold Spot US Dollar rose 0.82% to hover around $4,403.84 per ounce. The U.S. Dollar Index spot was 0.02% higher at the 99.8510 level.
Meanwhile, Bitcoin (BTC) was trading 0.49% lower at $63,723.57 per coin over the last 24 hours.
Asian markets were mixed on Wednesday. Australia's ASX 200, Hong Kong's Hang Seng, and India's Nifty 50 indices fell, while South Korea's Kospi, Japan's Nikkei 225, and China's CSI 300 indices rose. European markets were mostly lower in early trading.
