Stocks Trading Higher on Favorable CPI Report and Positive AI News

The S&P 500 Index ($SPX) (SPY) is up +0.45%, the Dow Jones Industrial Average ($DOWI) (DIA) is up +0.13%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.00%.  September E-mini S&P futures (ESU26) are up +0.99%, and September E-mini Nasdaq futures (NQU26) are up +0.37%. 

Stocks are trading higher today on strength in AI and chip stocks after CoreWeave and Super Micro reported better-than-expected earnings.  Stocks also received a lift from today’s favorable CPI report, which supported T-note prices and reduced the odds of a rate hike at the next FOMC meeting to 39% from 51% on Tuesday. 

Today’s July US CPI report was exactly in line with market expectations.  On a year-on-year basis, the July CPI eased to +3.4% y/y from June’s +3.5%, and the core CPI eased to +2.5% from June’s +2.6%.  On a month-on-month basis, the July CPI rose +0.1% m/m, and the core CPI rose +0.2% m/m.

Today’s July core CPI report of +2.5% y/y matched the 5.5-year low posted earlier this year but remained above the Fed’s 2% inflation target. The nominal CPI remains elevated at +3.4%, well above the 5.5-year low of +2.3% posted last year.

Sep WTI crude oil prices (CLU26) are trading mildly lower today despite few signs of any progress towards a US-Iran deal to open the Strait of Hormuz.  A Pakistan Foreign Ministry spokesperson said the current US-Iran talks continue and that a memorandum of understanding could be extended.  A US Navy helicopter fired two missiles at a cargo vessel on Tuesday that the US said was trying to call at an Iranian port, in violation of the US blockade on Iran’s ports.

President Trump late Tuesday told reporters that the US has “total control over the Hormuz Strait” and that “we own it.”  He added, “At some point, maybe they’ll do something, and then they get blown away.”

The outlook for strong Q2 earnings is a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost 32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence.  AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2.  So far, earnings results have been positive, with 85% of the 446 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. 

The markets are discounting a 39% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16, down from 51% on Tuesday.

Overseas stock markets are higher.  The Euro Stoxx 50 is up +0.12%.  China's Shanghai Composite closed up +0.32%.  Japan's Nikkei-225 Stock Average today closed up +0.83%.

Interest Rates

September 10-year T-notes (ZNU6) are up +8.5 ticks.  The 10-year T-note yield is down -2.7 bp to 4.662%.  T-note prices received a boost today from the favorable CPI report, with the core CPI easing to match a 5.5-year low.  Inflation expectations are mildly lower, with the 10-year breakeven inflation expectations rate down -0.7 bp to 2.258%.  On the bearish side, there are supply pressures ahead of today’s sale of $42 billion of 10-year T-notes and Thursday’s sale of $35 billion of 30-year T-bonds.

European government bond yields are lower.  The 10-year German bund yield is down -2.6 bp to 3.132%. The 10-year UK gilt yield is down -2.5 bp to 4.939%.

Markets are discounting an 88% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.

US Stock Movers

CoreWeave (CRWV), a key AI data center provider, is up more than +18% today after providing guidance for $3.45-3.60 billion in revenue for Q3, which was on the higher end of market expectations, and full-year revenue guidance of $12.4-13.2 billion, up from its previous guidance of $12-13 billion.  The company also reported positive news on orders and its backlog.

Super Micro Computer (SMCI) is up more than +16% on better-than-expected revenue guidance for Q3, which was a positive indicator for AI data center servers.

The favorable news from CoreWeave (CRWV) and Super Micro Computer (SMCI) is boosting chip stocks, with Marvell (MRVL), Applied Materials (AMAT), Lam Research (LRCX), and Micron Technology (MU) all trading up more than +4%.  The iShares Semiconductor ETF (SOXX) is up +2.8%.

The Magnificent Seven are struggling today, with five of the seven stocks trading lower, led by a decline of more than -1% in Microsoft (MSFT). However, Nvidia (NVDA) is up +1.9%.

H&R Block (HRB) is up more than +10% after positive fiscal Q4 results and stronger-than-expected full-year guidance.

Earnings Reports (8/12/2026)

Amcor PLC (AMCR), Cisco Systems Inc (CSCO), Coherent Corp (COHR), Performance Food Group Co (PFGC), Trimble Inc (TRMB).