US Markets Take a Dip Despite a Cautious Cooling Inflation
Thursday’s stock sprint didn’t go as smoothly as it could have—despite the latest inflation numbers suggesting a slowdown in the economy. What did that mean for the Fed? If the trend continues, the Federal Reserve may hit the rate‑cut button later in the year.
Index Action: A Mixed Bag
- S&P 500: slid to 5,595.00
- Nasdaq: dropped to 20,250.00
- Dow Jones: showed a faint uptick, ending at 39,770.00—a reminder that not everyone is in the same mood.
Bond Yields and the Fed’s Possible Play
Following the CPI announcement, Treasury yields eased, hinting that investors are sharpening their sights on a September rate cut. According to the CME’s FedWatch tool, the odds of a cut have surged to 93%.
Yet, the Fed is signaling that it will likely keep rates steady at the next meeting—exhibiting a cautious stance on short‑term monetary policy.
What the June CPI Report Tells Us
The June numbers come in cooler than many thought:
- Monthly CPI: fell 0.1% instead of rising 0.1%
- Annual CPI: up 3%, below the expected 3.1%
- Core CPI (ex‑food & energy): rose 0.1% monthly, 3.3% yearly—still under forecasts.
Overall, inflation’s deceleration appears stronger than predicted, nudging markets toward the idea of rate cuts, potentially in September.
Market Reactions on July 10, 2024
Wednesdays saw Wall Street’s giants hit fresh all‑time highs, buoyed by Chair Powell’s upbeat chatter about a possible “soft landing” for the economy. But many Fed officials stayed behind the curtains, saying they’d wait for more data before chopping rates. That added a splash of caution to the optimistic wave.
Bottom Line
Recent dips in U.S. indices and the back‑off in Treasury yields paint a picture of an economy that’s fluid and unsure. Even though a rate cut might be on the horizon, the Fed is buying time—waiting for clear signs that inflation is genuinely slowing before taking the plunge. Markets, meanwhile, keep bouncing around, reacting to every little hint from the economy and policy makers.
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