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Dow slips as CPI cools, rate hike odds shift toward later timeline
June CPI fell 0.4% month over month, lowering annual inflation to 3.5% and pushing July rate-hike odds down to 17% from 42% while September remained priced at a 63% chance of a quarter-point higher target.
June CPI came in softer than expected, with the consumer price index down 0.4% month over month versus a 0.1% decline forecast, and the annual rate easing to 3.5% from 4.2%. Core prices were flat on the month and slowed to 2.6% year over year versus 2.8% expected, according to the report summarized by FXStreet.
Despite the inflation relief, the Dow Jones Industrial Average traded lower, down 0.29% on the session at 52,356 after testing 52,006 earlier. The S&P 500 rose 0.5% and the Nasdaq Composite gained 1%, helped by a semiconductor rebound, while the Dow reaction reflected a mix of company-specific moves.
FXStreet pointed to Goldman Sachs shares rising 8% after an earnings beat, contrasted with IBM’s 25% drop after the company warned second-quarter profit would fall short due to softer demand across its software and infrastructure businesses. The outlet also said the CPI data reduced the odds of a July hike to 17% from 42%, while leaving September pricing at a 63% chance that the target rate would be at least a quarter point higher by autumn.
Rate futures implied the market “removed July” while keeping September on the table, and FXStreet added that the CPI “bought the Federal Reserve room” without shifting expectations toward a pivot. The report also noted Fed Chair testimony before the House committee, scheduled for 12:30 and 14:00 GMT, with subsequent Fed speakers later in the day.
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