US CPI Failed to Alleviate Wall Street Fears – US Market Wrap

Relatively tame inflation data failed to alleviate Wall Street’s concerns about the effects of tariffs, with initial rallies in stocks and bonds stalling on bets that the Federal Reserve will keep interest rates on hold for the time being. Tech stocks rose on news that Nvidia and AMD would resume some chip sales to China, while traders also analyzed bank results.

The S&P 500 fell after reaching a high of 6,300. Wells Fargo cut its net interest income guidance, causing a drop in the US financial giants index. JPMorgan fell even as investment bankers reported a surprise gain. Citi shares rose to their highest level since 2008 as a result of a stock buyback program. While short-dated Treasuries led the decline, longer maturities also fell, with 30-year yields exceeding 5%. The dollar gained 0.4%.

In June, underlying US inflation rose less than expected for the fifth month in a row, indicating that businesses are beginning to pass on some tariff-related costs to customers. Traders have priced in slightly lower odds that the Fed will cut rates more than once this year, with the probability of a move in September now seen as only slightly higher than 50%.

Treasury Secretary Bessent suggested that Fed Chair Powell step down from the board when his term ends in May 2026. When asked if Trump had asked Bessent to serve as Fed chair, the Treasury Secretary said, “I am part of the decision-making process.” According to him, “it’s President Trump’s decision, and it will move at his speed.”