Market activity earlier today looked ready to trade up on CPI numbers for July which helped advance the narrative that inflation continues to dwindle over time, making it at least somewhat less likely that the Fed would again raise interest rates next month, and market participants could count the days until a rollback of the Fed funds rate could commence. During the course of the day, however, it was clear that all of this was a bit too much to ask for.

This is not suggest today’s regular trading session was at all disastrous; in fact, although we’ll call the day overall “flat,” three of the four major indices closed in the green today. The Dow gained 54 points, +0.16%, while the Nasdaq rose +0.12%. The S&P 500 was an even more scant +0.03%, and the small-cap Russell 2000 — which not long ago was leading its larger brethren — dipped -0.43% on today’s session. Only the Nasdaq is in the red over the past month, but year to date is still a very robust +32%.

Today’s Consumer Price Index (CPI) report for last month was good — core year over year came in at +4.7%, nearly 200 basis points (bps) below cycle highs of +6.6% back in September of last year. Further, today’s number marked the fourth-straight downward core CPI year over year, after getting “stuck” around +5 1/2% in the first third of 2023. That said, we’re still a ways from the +2% inflation the Fed has long says it considers optimum levels in our market.

Tomorrow morning brings us the companion piece to CPI: the Producer Price Index (PPI). Here we’ve seen core year-over-year numbers come a lot closer to that +2% benchmark; last month, core PPI year over year reached +2.6%. Elsewhere, June results saw a lot of +0.1% gains in various measures: month-over-month headline, and core, and year-over-year headline. Because these metrics are not on the retail side, they don’t have quite the heft of importance the CPI numbers do. But one might say they are something of a precursor to future CPI figures.

We also notice Q2 earnings season beginning to wind down a bit, or at least moving away from many of the big names. Overall, analysts see Q2 performing better than expected — not great, but improving. Consider also that many so-called experts had written down this time as ripe for a dreaded recession as the Fed keeps interest rates elevated for longer. Yet the economy has proved more resilient, especially in terms of labor force numbers we saw not only this morning with Jobless Claims but in last week’s ADP (ADP Quick QuoteADP - Free Report) private-sector jobs report and Friday’s non-farm payroll results.

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