U.S. Morning Market: July CPI Eases Rate Hike Concerns, Major Indices Open Higher, Treasury Yields Slide

U.S. inflation data for July came in line with expectations, alleviating market concerns about a potential Federal Reserve (Fed) rate hike in September, prompting major U.S. indices to open higher on Wednesday (12th). The S&P 500 rose 0.5%, hovering near record highs; the Nasdaq Composite gained 0.9%, and the Dow Jones Industrial Average climbed 151 points, or 0.3%.

AI-related stocks CoreWeave and Super Micro Computer (SMCI) led the tech rally, pushing the Nasdaq-100 up by nearly 1%. Bond markets also strengthened, with the U.S. 2-year Treasury yield falling 4 basis points to 4.17%. Money markets reduced bets on a September Fed rate hike.

At the time of writing, the Dow Jones Industrial Average was up over 160 points, or nearly 0.3%; the Nasdaq Composite was down nearly 60 points, or close to 0.2%; the S&P 500 edged up 0.02%; and the Philadelphia Semiconductor Index rose 1.0%. TSMC ADR gained nearly 0.4%.

The U.S. Bureau of Labor Statistics (BLS) reported that July’s Consumer Price Index (CPI) rose 0.1% month-over-month and 3.4% year-over-year. Core CPI, excluding volatile food and energy prices, increased 0.2% month-over-month and 2.5% year-over-year—both in line with market expectations. The year-over-year core CPI matched the lowest level since March 2021, indicating continued easing of underlying inflation pressures.

Following the weak July jobs report released last Friday, cooling price growth may further ease the Fed’s inflation anxiety. The Fed held rates steady on July 29, but three officials dissented and advocated for a rate hike, highlighting internal policy divisions.

Lindsay Rosner of Goldman Sachs Asset Management stated that core inflation remains under control, reinforcing the trend seen in June and strengthening the case for the Fed to hold rates steady in September.

With Fed Chair Kevin Warsh attempting to reduce pre-emptive guidance on policy intentions—breaking the recent tradition of shaping market expectations before formal decisions—economic data has gained heightened importance. After the Fed held rates steady last month, long-term Treasury yields briefly reached near 20-year highs.

Skyler Weinand of Regan Capital noted that while the July CPI meeting expectations is positive, inflation is increasingly tied to oil prices, and the Fed cannot control the geopolitical situation in the Strait of Hormuz. This implies the path to returning inflation to the 2% target remains long and uncertain.

Weinand added that although inflation remains elevated, it is largely stable, and the Fed will continue to make data-dependent decisions. Several key economic reports will be released before the September meeting, leaving the rate hike decision uncertain.

In other markets, oil prices were volatile as traders assessed the potential for an agreement to restore energy shipments through the Strait of Hormuz.

As of Wednesday (12th) around 21:00 Taipei time:

- Dow Jones Industrial Average: +63.60 points (+0.12%), at 53,855.45 - Nasdaq Composite: +156.57 points (+0.59%), at 26,602.02 - S&P 500: +24.56 points (+0.32%), at 7,752.76 - Philadelphia Semiconductor Index: +386.74 points (+3.20%), at 12,485.21 - TSMC ADR: +1.73% to $429.45 per share - 10-year Treasury yield: down to 4.65% - NY Light Crude: -0.48% to $82.80 per barrel - Brent Crude: -0.60% to $88.38 per barrel - Gold: +0.84% to $4,478.20 per ounce - U.S. Dollar Index: down to 99.72

Key stocks:

- Super Micro Computer (SMCI-US): up 16.84% in pre-market, to $36.92 per share. The company exceeded Q4 earnings expectations and issued an optimistic Q1 outlook, forecasting adjusted EPS of $1.01–$1.10 (vs. $0.76 expected) and revenue of $14.5–15.5 billion (vs. $11.68 billion expected).

- CoreWeave (CRWV-US): up 22.41% in pre-market, to $110.56. The AI cloud computing firm reported a 5% adjusted operating margin (vs. 2.7% expected) and 112% year-over-year revenue growth to $2.58 billion (vs. $2.56 billion expected), signaling strong demand for AI infrastructure.

- Nebius Group (NBIS-US): up 16.22% in pre-market, to $224.57. The AI infrastructure company beat analyst expectations on revenue and EBITDA, with gross margins exceeding market estimates.

Key economic data:

- U.S. July CPI YoY: 3.4% (expected 3.4%, prior 3.5%) - U.S. July CPI MoM: 0.1% (expected 0.1%, prior -0.4%) - U.S. July Core CPI YoY: 2.5% (expected 2.5%, prior 2.6%) - U.S. July Core CPI MoM: 0.2% (expected 0.2%, prior 0.0%)

Wall Street analysis:

Omdia stated that AI demand continues to outpace global supply capacity, driving strong growth in DRAM and NAND markets. It raised its 2026 global semiconductor market revenue growth forecast to 94.1% year-on-year, expecting memory chips to account for over 50% of total semiconductor revenue.

Meanwhile, AI demand has already exceeded current semiconductor manufacturing and packaging capacity. Bottlenecks in high-bandwidth memory (HBM), advanced packaging, and advanced process nodes are expected to persist at least until 2027.