Tuesday, the market got the exact inflation number it was begging for and did what any responsible adult would do: it threw a rave.
June CPI came in cold. The chip crowd went vertical. Everybody high-fived.
Nobody looked out the window, where oil is on fire and the Strait of Hormuz has turned into a shooting gallery. Great party. Somebody should probably locate the exits before the music stops.
What You Need to Know in Under 60 Seconds
June CPI came in at 3.5%, below the 3.8% everyone had braced for. Month-over-month, prices fell 0.4%, the largest monthly decline since 2020.
Rate-hike odds for 2026 cratered from 73% to a coin flip. Yes, hike. This Fed still isn't in the cutting business.
Semis threw the party: Micron +4.9%, Nvidia +4.1%, AMD +2.6%. A grand in Micron at Monday's close was $1,049 by Tuesday's bell.
The Nasdaq (+1.1%) did all the lifting. The Dow (+0.04%) slept through the whole thing.
Oil ripped again: WTI cleared $80, up roughly 10% in two sessions, on fresh US-Iran fighting around Hormuz.
Gold +1.4%, Bitcoin +4.4%, VIX down to 16.5. Risk-on, with a geopolitical hedge tucked under the pillow.
Today: a wall of bank earnings. Tomorrow: TSMC and Netflix. The whole week hinges on oil not turning June's CPI into a liar.
Where Things Landed
What | Close | Move | Mood |
|---|---|---|---|
S&P 500 (SPY) | 751.83 | +0.36% | Green, quietly |
Nasdaq 100 (QQQ) | 719.71 | +1.12% | Throwing the party |
Dow (DIA) | 524.69 | +0.04% | Fast asleep |
Russell 2000 (IWM) | 294.51 | +0.35% | Tagging along |
VIX | 16.50 | -3.8% | Unbothered |
Gold (GLD) | ~$372 | +1.4% | Hedging its bets |
WTI crude | ~$80 | +2.0% | On fire (literally) |
10Y yield | 4.59% | -3 bps | Chilled out |
Bitcoin | ~$64,950 | +4.4% | Sprinting |
Index rows are the SPY/QQQ/DIA/IWM fund closes; crude is the WTI front-month.
What Happened Yesterday
The number that ended the argument
June CPI printed 3.5%, and the room exhaled. Month-over-month, prices dropped 0.4% — the largest single-month decline since the pandemic. Shelter rose just 0.1%, the smallest in five years. Used cars fell for a sixth straight month. Even apparel got cheaper.
Translation: the one data point that could have forced new Fed Chair Kevin Warsh to start hiking into a slowing economy came in soft, and traders bought everything that wasn't nailed down.
Notice what nobody's celebrating: this market's best-case scenario is that the Fed doesn't hike. Cuts aren't even on the menu. We are throwing confetti because the guy holding the fire hose decided not to turn it on. Set the bar on the floor and you'll never trip over it.
The chip crowd went full send
Semis did the heavy lifting and then some. Micron: 4.9%; Nvidia: 4.1%; AMD: 2.6%; Broadcom: 1.3%. The Philadelphia Semiconductor index is up nearly 80% on the year, and Micron is now a top holding in a value ETF, which should tell you how weird things have gotten.
Here's the part they'll bury on page nine. Bank of America's July survey just crowned "long semiconductors" the most crowded trade on Earth, 82% of fund managers, up from 73% in May. Chinese hedge funds that made a killing on AI names are quietly heading for the exits. Apollo's Torsten Slok is out with a two-punch case for why the whole thing wobbles.
Translation: everyone is on the same side of the boat, and the boat is having a wonderful time. Sound familiar?
Oil is the guest nobody invited
While equities partied, crude quietly went vertical. WTI cleared $80 for the first time since mid-June, up around 10% in two sessions. The reason is not subtle: the US reimposed its blockade of Iranian ports on the Strait of Hormuz and ran fresh airstrikes, Iran hit Emirati tankers and Kuwait, and the Houthis lobbed missiles at Saudi Arabia. Trump floated a 20% "toll" to sail through the Hormuz Strait, then scrapped it by dinner.
Translation: a fifth of the world's seaborne crude runs through that chokepoint, and right now it's a war zone with a tollbooth attendant who can't decide on a price.
The tape that wasn't as green as the headline
Look under the hood, and the party guest list was short. The Dow finished dead flat. Microsoft dropped 1.6%, Apple slid 0.8%. This was semis and a couple of megacaps carrying a narrow rally on their backs while half the market watched from the couch. Breadth this thin is the kind of thing that looks fine right up until it doesn't.
What to Watch Today
Bank earnings avalanche (pre-market): JNJ, Morgan Stanley, BlackRock, PNC, BNY Mellon, Progressive, and Cintas all report before the bell. United Airlines and Kinder Morgan land after the close. Earnings season officially stops being a rumor today.
ASML already jumped pre-market on its print, dragging chip-equipment names up with it. The semis crowd gets a live read on whether the spend is real.
Fed Beige Book, 1:00 PM CT. The anecdote is real behind the data. Watch for how many districts use the word "tariffs" or "energy."
EIA weekly petroleum inventories, ~9:30 AM CT. With oil this jumpy, a bigger-than-expected draw is a match near the gas can. The API already flagged a 13th straight weekly decline.
Fed's Musalem speaks, 5:30 PM CT. Post-CPI, every syllable about "hikes" gets microscoped.
Tomorrow is the real main event: TSMC and Netflix earnings, plus Retail Sales and jobless claims. The chip trade and the consumer both get graded in the same 24 hours.
The one thing that could ruin everyone's day
Read the CPI fine print, and you'll find that falling energy prices did a lot of the work pulling inflation down. Now look at the oil tape. WTI just jumped 10% in two days because of a shooting war around Hormuz.
The number the market celebrated Tuesday is backward-looking. The oil chart is forward-looking, and it's screaming the opposite. If crude keeps climbing, next month's CPI undoes this whole rally, and hawkish Kevin Warsh walks right back into the room he just left.
The party is celebrating cheap gas while somebody sets fire to the refinery. Enjoy responsibly.
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