Good morning! The inflation report Tuesday marked the biggest input for markets before the September rate cut, and investors basically read it as a “Goldilocks” print. The nuances of the data put the Fed in a tough position, yet the action-item still seems clear — the September rate cut is a go.

Cooler headline prices

Wall Street got just the inflation report it was looking for on Tuesday, and investors wasted no time in celebrating.

July CPI showed headline inflation rising 2.7% year-over-year, below economists’ 2.8% forecast and matching June’s pace. The core reading, which strips out food and energy, rose 3.1% from a year ago, above forecasts for 3.0% and marking the highest level since February. 

The numbers offered the latest counterpoint to predictions that President Trump’s tariffs would trigger a broad inflation spike. 

“Tariffs have had limited effects on inflation so far,” said Comerica’s chief economist Bill Adams. “But since tariff rates are up one day, down the next, then up even more the day after, it is too early to say how large their effect on prices will ultimately be.”

Scott Helfstein, head of investment strategy at Global X, added that there’s “little evidence” tariffs are causing a meaningful rise in inflation at this point, noting that shelter and energy services like electricity and piped gas remain primary drivers.

In any case, markets seemingly read the data as the final green light for Fed easing. September rate-cut odds jumped to 94.4% from 85% a day earlier. 

One month prior, those odds hovered at 57%, according to CME data.

Notably, JPMorgan Wealth Management strategist Elyse Ausenbaugh cautioned that it’s still possible the Fed doesn’t budge next month. 

“I don’t think a cut at that meeting is as much of a given as market pricing is implying,” said Ausenbaugh. 

The print was nonetheless enough to fuel the S&P 500 above 6,400 for the first time to a fresh record high.

Large-cap stocks rallied and small-cap names— which benefit most from lower interest rates — also climbed.

Economists, for their part, have spent much of 2025 on the wrong side of the macro outlook, warning tariffs would unleash a wave of inflation.

While certain categories — like footwear — show some pass-through effects, broad price pressures remain contained.

Goods inflation has firmed up, yet falling energy costs and moderate services inflation have offset material gains.

Meanwhile, market-implied inflation expectations have also moderated from the start of the year.

That’s left bullish investors in a sweet spot: 

• Inflation isn’t accelerating as much as consensus expected

• The labor market has weakened but not yet collapsed

• Policymakers are effectively guaranteed to cut rates in a few weeks

That cocktail is already proving hard to ignore for anyone buying into the stock market. 

Market snapshot

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Elsewhere

📊 Tariffs brought in record $27.7 billion in July. Revenue supplied by importers hit another monthly record, according to Treasury Department data out Tuesday. That’s a step up from June’s $26.6 billion and May’s $22.2 billion. (Yahoo Finance)

📉 Cava stock cratered after weak earnings. The restaurant chain lowered its outlook for same-store sales and shares tumbled more than 20% in extended trading. Cava said its quarterly traffic was “roughly flat.” (CNBC)

📈President Trump is driving this market. The White House is as involved in day to day market swings as economic data, and that influence has spanned tariffs, debt, commodities and crypto. Big Tech stocks too have all been influenced by Trump’s deals and commentary. (Barron’s)

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Rapid-fire

• Ethereum hit $4,500 for the first time since 2021 (Yahoo Finance)

• President Trump called out Goldman Sachs for being too bearish on his tariff agenda (Yahoo Finance)

• Nvidia effectively bought its way out of tariff repercussions in its deal with the White House (WSJ)

• Boeing’s July aircraft deliveries dropped 20% from June (CNBC)

• AI company Perplexity made an unsolicited offer to buy Chrome from Google for $34.5 billion (TechCrunch)

• Trump’s pick to lead the Bureau of Labor Statistics could pause monthly jobs report over accuracy concerns (Bloomberg)

• Tesla stock slipped with Elon Musk beefing with Apple on X (Barron’s)

• Crypto entrepreneur Do Kwon pleads guilty to fraud charges related to TerraUSD and Luna (WSJ)

• Bullish investors keep shrugging off inflation risks (Opening Bell Daily)

Interview

I joined the New York Stock Exchange’s podcast, Inside the ICE House, for a segment discussing the outlook for Fed policy, the stock market’s response to tariffs, and the implications of AI on investors.

Last thing

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About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

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