CPI said “maybe relax a bit”
Stocks spent Tuesday acting like someone had finally turned down the thermostat. June headline CPI fell 0.4% month over month, bringing the annual rate to 3.5%, and investors immediately treated that like a permission slip for the Fed to keep its hands off rates this month.
The result? The Nasdaq ripped higher by more than 200 points, while the S&P 500 and Dow both finished in the green. Not exactly a victory parade, but definitely enough to make the market mood ring the doorbell and ask if it can come in.
The usual suspects caught a wave
Semiconductors bounced after the prior session’s bruising, with names like Applied Materials and Micron moving higher as investors rotated back into the stuff that tends to hate higher rates and love better sentiment.
Meanwhile, banks had a moment too:
- Goldman Sachs jumped after quarterly results.
- Bank of America also posted better-than-expected earnings.
- Morgan Stanley, Johnson & Johnson, and Progressive were on deck for earnings later in the day, because apparently nobody gets to relax in earnings season.
Fear is fading — slowly
CNN’s Fear & Greed Index improved to 43.3 from 41.7, but it’s still hanging out in the “Fear” zone. So yes, the market feels a little less miserable. No, it’s not exactly acting like it just won the lottery.
That matters because sentiment can move just as fast as fundamentals in the short run. If inflation keeps cooling, the market gets more room to price in easier policy, and that can be rocket fuel for growth stocks, semis, and pretty much anything that gets grumpy when borrowing costs stay sticky.
Big picture: one CPI print doesn’t end the inflation saga, but it can absolutely change the playlist for a trading day.