Inflation News Gives Stock Market a Bump
Stock market prices increased as inflation held steady for July compared to the same time last year.
Quick overview
- The July inflation report shows a steady rate of 2.7%, indicating that Trump's tariffs have not yet impacted the market as expected.
- Stocks rose following the report, with the Dow Jones increasing by 1.08% and the Nasdaq Composite reaching a record high.
- While inflation is stable, concerns remain that it could rise in August due to new tariffs, although some deadlines have been postponed.
- Overall, the Consumer Price Index suggests minimal changes from last year, with furniture prices up and apparel costs slowing down.
The July report for inflation is in and the data show that inflation is holding steady at 2.7%, indicating that Trump’s tariffs are not causing the market tightening that was expected.
Stocks rose on Tuesday as July’s inflation report came in. The Consumer Price Index showed that inflation remained at a steady 2.7% rate, and that allowed investors some freedom to risk their assets on the market. The Dow Jones rose by 1.08% Tuesday morning while the S&P 500 added 0.98%. The Nasdaq Composite increased by 1.18% as well, once again setting a record high for that index.
Better Than Anticipated Inflation
While inflation is not dropping, at least it is not increasing, and that is always good news for the stock market. There has been concern that Trump’s new tariffs would cause the market to dip and inflation to increase, but that has not happened yet. Of course, some of the new tariffs were not intended to take effect until last week, so they would not have affected July’s consumer price index numbers.
What we may see is that inflation increases in August, but if a number of countries decide to play nice with the United States, those new tariffs could be held off. That is what is happening with China right now, as the United States has agreed to push back the deadline on new tariffs there for 90 days.
The expectation for July’s year-on-year inflation was that it would increase 2.8%, but this week’s report showed better than anticipated results. That gives the stock market some breathing room, but it likely does not bring the Federal Reserve any closer to issuing a new interest rate cut that investors have been clamoring for.
The broad look at the Consumer Price Index report would suggest that nothing has changed much from this time last year, but in actuality, furniture prices are up while apparel prices and appliance costs slowed down. Tariffs are already affecting prices, but so far, the effects have not been significant. Investors should expect to see higher inflation for next month’s report, though, unless something changes on the tariff front.
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