July CPI to Be Announced on the 12th
Rate Cut Arguments Likely to Gain Momentum if Data Meets Expectations
July PPI and Retail Sales to Be Released on the 14th and 15th
Nvidia Down, AMD Up After Reports on China Semiconductor Export License
The three major indices on the New York Stock Exchange were mixed in early trading on the 11th (local time), hovering around the flatline. Investors are taking a breather after last week's rally and are awaiting the release of the July Consumer Price Index (CPI) later this week.
As of 10:13 a.m. on the same day in the New York stock market, the blue-chip Dow Jones Industrial Average was down 35.82 points (0.08%) at 44,139.79. The large-cap S&P 500 was up 5.11 points (0.08%) at 6,394.56, while the tech-heavy Nasdaq was up 27.74 points (0.13%) at 21,477.76.
By stock, Nvidia was down 0.3%, while AMD was up 1.3%. The previous day, the Financial Times (FT) reported that the two companies had agreed to pay 15% of their local sales in China to the U.S. government as a condition for receiving semiconductor export permits to China. Since then, the two companies' stock prices have shown diverging trends. Intel surged 4.51% on news that CEO Lip-Bu Tan, who had faced public pressure to resign from U.S. President Donald Trump, would visit the White House. Tan is expected to clarify allegations of ties to China and emphasize Intel's contributions to the United States. Tesla was up 3.64%, while Apple was down 0.93%.
Investors are focused on the July CPI, which will be released on the 12th. According to market forecasts, last month's CPI is expected to have risen 2.8% year-on-year, an increase from June's 2.7%. The core CPI, which excludes the more volatile food and energy sectors, is expected to rise 3.0% year-on-year, slightly above June's 2.9%. Amid recent signs of a slowdown in employment, the market is expected to use this data to gauge the extent of potential interest rate cuts within the year.
The interest rate futures market currently reflects an 86.5% probability that the U.S. Federal Reserve (Fed) will cut rates by 0.25 percentage points at the September Federal Open Market Committee (FOMC) meeting. The probability of a total 0.5 percentage point cut within the year is 43.8%, while the probability of a 0.75 percentage point cut is 42.8%.
Other economic indicators will also be released this week. The July Producer Price Index (PPI), to be announced on the 14th, is expected to rise 0.2% from the previous month, a larger increase than June's 0%. July retail sales, to be released on the 15th, are expected to increase by 0.5%, a slight slowdown from June's 0.6% growth.
Jay Woods, chief global strategist at Freedom Capital Markets, said, "The most important indicator is the CPI," adding, "This figure will certainly have a significant impact on monetary policy."
The market is testing its potential for further gains amid rising valuations following the recent rally and concerns about stagflation?simultaneous inflation and economic stagnation?due to tariff effects. According to a Bank of America (BoA) survey, the proportion of fund managers who view U.S. stocks as overvalued after their sharp rise since the April low has reached 91%, the highest level since 2001.
Woods, the chief global strategist, said, "The market is closer to a digestion phase than at any other time," adding, "Even if we see a sideways trend going forward, it is not a negative development."
U.S. Treasury yields are moving within a narrow range. The yield on the benchmark 10-year U.S. Treasury note was down 1 basis point (1bp=0.01 percentage point) from the previous session at 4.27%, while the yield on the 2-year Treasury note, which is sensitive to monetary policy, was up 1 basis point at 3.76%.
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