Stock market today: Dow, S&P 500, Nasdaq rise as Fed rate cut bets jump after CPI inflation report

Updated Tue, Aug 12, 2025, 9:59 AM 2 min read

The latest data from the Bureau of Labor Statistics showed that “core” inflation, which excludes volatile food and energy costs, rose 3.1% over the past year in July, ahead of June’s 2.9% increase and indicating that rising goods inflation is no longer being offset by easing services inflation.

But on a headline basis, the Consumer Price Index (CPI) increased 2.7% year-over-year, matching June and coming in softer than economist expectations of a 2.8% rise.

After the inflation report’s release, bets jumped on a Fed rate cut in September. Around 94% of traders expect that outcome, according to the CME Group.

The report was the first major piece of economic data to be released by the Bureau of Labor Statistics after Trump fired Erika McEntarfer as commissioner of the BLS earlier this month following the release of the July jobs report. Late Monday, Trump announced that he nominated E.J. Antoni, chief economist at the conservative Heritage Foundation, to lead the agency.

Investors will get two more pulse checks on the state of the economy later this week, with the release of the Producer Price Index on Thursday and retail sales data on Friday.

In corporate news, Intel (INTC) stock gained over 1% after CEO Lip-Bu Tan met with Trump, who had called for Tan’s resignation just last week.

After the meeting, Trump posted to Truth Social calling the meeting “a very interesting one” and hailing the CEO’s “success and rise” as “an amazing story.”

On Tuesday, reports said China urged local firms not to use Nvidia H20 chips, complicating Trump’s bid to turn those sales into a US windfall. Trump also granted another 90-day pause on the most punishing tariffs on China as the two countries work toward a trade deal.

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One reason July’s CPI data supports the case for Fed rate cuts

At a high level, July’s Consumer Price Index (CPI) had a bit of something for everyone.

The latest data from the Bureau of Labor Statistics showed that “core” inflation, which excludes volatile food and energy costs, rose 3.1% over the past year in July, ahead of June’s 2.9% increase. But on a headline basis, the Consumer Price Index (CPI) increased 2.7% on an annual basis in July, matching June‘s number and slower than economist expectations of a 2.8% rise.

In a note to clients following the release, Renaissance Marco’s head of economics Neil Dutta zoned in on the headline increase which came in better-than-expected.

“If tariffs are causing an inflation problem, then headline inflation rates ought to be accelerating,” Dutta wrote. “However, overall inflation is not rising as rapidly as expected likely because nominal growth remains sluggish.”

Dutta points out that over the past six months headline CPI has increased at a 1.9% annualized rate, the slowest pace seen since October 2024. In his view, July’s CPI data “cements” a September interest rate cut from the Fed. Markets seem to agree for now, with traders pricing in a roughly 94% chance the Fed lowers rates in September, per the CME FedWatch Tool.

“You might be thinking, why not a bigger upfront move,” Dutta wrote. “Doves on the FOMC need to fight one battle at a time. There is a wide contingent of folks on the FOMC with tariff derangement syndrome, not seeing cuts at all this year. They won’t be able to make the leap from no cuts to a large upfront move overnight.”
Stocks open higher

US stocks moved higher on Tuesday as Wall Street digested fresh inflation data and President Trump revealed his pick to head the Bureau of Labor Statistics.

The Dow Jones Industrial Average (^DJI) rose about 0.5%. The S&P 500 (^GSPC) popped 0.4%, while the tech-heavy Nasdaq (^IXIC) led the gains rising more than 0.5%.
September Fed rate cut bets hold steady following CPI

Following Tuesday’s July inflation reading, market bets on a Federal Reserve interest rate cut held relatively steady. Investors are now pricing in a roughly a 90% chance the central bank cuts rates in September, up slightly from a 86% chance seen the day prior, per the CME FedWatch Tool.
‘Core’ price increases accelerate more than expected in July

Price increases accelerated more than expected in July.

The latest data from the Bureau of Labor Statistics showed that on a “core” basis, which strips out the more volatile costs of food and gas, consumer prices increased 3.1% over the prior year in July, an increase from June’s 2.9% and above economists’ forecast for 3%.

Core prices climbed 0.3% over the prior month, ahead of June’s 0.2% increase but in line with expectations.

The headline Consumer Price Index (CPI) showed prices increased 2.7% in July, unchanged from the month prior and below the 2.8% economists had expected. On a month-over-month basis, prices increased 0.2%, lower than the 0.3% seen the month prior.
Circle stock jumps on first earnings report since going public

Circle (CRCL) posted higher revenue and reserve income on Tuesday in its first quarterly report since its IPO in June, as circulation of its stablecoin USDC (USDC-USD) spread.

Circle stock rose 6% in premarket trading on Tuesday. Its total gains since going public are now 133%.

Reuters reports:

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US small business optimism rebounds, but uncertainty clouds outlook

Reuters reports:

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Good morning. Here’s what’s happening today.
Cannabis stocks soar as President Trump considers reclassifying marijuana

Tilray (TLRY) stock rose another 10% in premarket trading on Tuesday after soaring 41% on Monday amid speculation that President Trump may move to reclassify marijuana as a less dangerous drug.

The Canadian cannabis company traded hands at over $1 per share for the first time since February. Despite a 60% gain in the past month, however, shares are still off by 30% for the year.

Other cannabis stocks saw a major lift as well. Trulieve (TCNNF) gained 38% on Monday, Curaleaf (CURLF) was up 35%, Green Thumb Industries (GTBIF) added 19%, Aurora (ACB) increased 16%, and Canopy Growth (CGC) surged 26%.

On Friday, the Wall Street Journal reported that Trump told donors at a New Jersey fundraiser he was considering making marijuana a Schedule III drug, which would ease restrictions on the substance. Trump said he will make a final decision in the coming weeks.

“We’re looking at reclassification and we’ll make a determination over the next — I would say over the next few weeks, and that determination hopefully will be the right one,” Trump said. “It’s a very complicated subject.”
Intel is still a disaster

Intel (INTC) is rallying premarket as Trump walked back his apparent hate for the company’s CEO, Lip-Bu Tan, after meeting on Monday.

Don’t be fooled by the price action, however.

This isn’t the case like Apple (AAPL), where CEO Tim Cook kisses Trump’s butt and the company is exempt from various tariffs. Intel is a fundamental disaster right now. People in the industry I talk to are unsure if the company will ever come back to a state of health, given 1) how fast AI chip development is occurring, and 2) how far behind Nvidia and AMD Intel is.

Intel’s statement on the meeting:

“Earlier today, Mr. Tan had the honor of meeting with President Trump for a candid and constructive discussion on Intel’s commitment to strengthening U.S. technology and manufacturing leadership. We appreciate the President’s strong leadership to advance these critical priorities and look forward to working closely with him and his Administration as we restore this great American company.”
Japan’s Nikkei hits record high on tariff relief, tech rally

The Nikkei 225 (^N225) hit a record high Tuesday as easing US tariff fears boosted optimism, led by tech stocks and tariff relief.

Bloomberg News reports:

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