S&P 500 Wipes Out Gain As US 30-Year Yield Tops 5%: Markets Wrap

A relatively tame inflation reading failed to ease Wall Street’s concerns about the impacts of tariffs, with stocks and bonds falling on speculation the Federal Reserve will keep rates on hold for now. Tech shares outperformed on news Nvidia Corp. and Advanced Micro Devices Inc. will resume some chip sales to China, with investors parsing results from big banks.

The S&P 500 wiped out gains after hitting 6,300. A gauge of US financial giants sank as Wells Fargo & Co. cut its guidance for net interest income. JPMorgan Chase & Co.’s investment bankers eked out a surprise gain while Citigroup Inc.’s traders rode the tariff-induced volatility in markets, with revenue buoyed by record trading volumes. While short-dated Treasuries led losses, longer maturities also got hit - with 30-year yields topping 5%. The dollar rose 0.3%.

Underlying US inflation rose by less than expected for a fifth month in June even as the details signaled companies are beginning to more meaningfully pass some tariff-related costs to consumers. Investors still expect the central bank to stay on hold this month, with money markets pricing in somewhat lower odds officials will cut rates more than once this year.

“This number relieves worst-case fears about tariffs spiking inflation, but there was some upward pressure in the exposed category of apparel,” David Russell at TradeStation. “This is good news overall, but it’s not conclusive and may show some risk of tariffs getting passed through. The waiting game continues.”

US Treasury Secretary Scott Bessent suggested that Fed Chair Jerome Powell should step down from the central bank’s board when his term as chair is up in May 2026. Asked whether Trump has asked Bessent himself to serve as Fed chair, the Treasury chief said, “I am part of the decision-making process.” He noted that “it’s President Trump’s decision, and it will move at his speed.”

• Gina Bolvin at Bolvin Wealth Management Group:

Inflation’s not going quietly. June’s 2.7% CPI reading tells us the road back to 2% won’t be smooth and gives the Fed reason to pause before cutting rates. Markets expecting an aggressive pivot may be disappointed. For investors, patience pays — stick to diversification, favor quality, and use short-term fixed income to your advantage.

• Chris Zaccarelli at Northlight Asset Management:

Traders were keeping a close eye on this morning’s CPI report and the Fed was probably looking even more closely at it as the internal debate continues into whether or not they should be cutting interest rates right now.Fortunately, the report this morning was mostly in line with expectations. If it’s true that inflation is staying in check, then the Fed can go ahead and cut interest rates – potentially as early as September – but if subsequent reports show a different story, then the Fed is going to have to stay on hold even longer.

• Scott Helfstein at Global X:

This is kind of a perfect inflation report for the Fed, just hot enough to justify their policy of holding rates steady, but not reflective of runaway prices. The question now is whether the labor market holds up throughout summer, and it probably will. If we see strong corporate earnings for the second quarter, growth forecasts for the US may be revised higher.

• Jay Woods at Freedom Capital Markets:

This was the first of three reports before the September meeting as July cuts seem to be off the table. Today’s readings did nothing to change that stance but put the focus squarely on September.Clearly inflation remains sticky, but it is far from changing course. The continued tariff uncertainty remains just that – uncertain. If the data stays in-line with expectations then “the one data point at a time” stance the Fed usually follows should take precedence over the uncertainty of tariffs and thus a cut in September.

• Ellen Zentner at Morgan Stanley Wealth Management:

Inflation has begun to show the first signs of tariff pass-through. While services inflation continues to moderate, the acceleration in tariff-exposed goods in June is likely the first of greater price pressures to come. The Fed will want to hold steady as it awaits more data.

• Jeffrey Roach at LPL Financial:

Inflation pressure will likely remain acute for the rest of the summer. Tariffs have not materially impacted inflation metrics yet so we should expect some further pressure in the coming months. But for the patient investor, inflation will likely stabilize later this year as consumer demand slows, and firms have time assess trade shocks. After a rise in the coming months, I expect December CPI will go back down to 2.7% and the Fed’s preferred metric, the PCE deflator, approaching 2.6%. Although the President has called for rate cuts, the Fed will likely stand pat until inflation pressures abate.

• Bret Kenwell at eToro:

Because today’s report is largely in-line with expectations, the rise in inflation isn’t catching investors off-guard in the way that some may have expected when looking at the headlines. That could allow stocks to avoid a selloff in the near term, even as this latest inflation print may force investors to ask whether this is just a one-off blip or the start of something bigger.Today’s inflation report all but dashes any remaining hopes that the Fed may cut interest rates at its meeting later this month. However, if subsequent inflation readings reiterate the rise in inflation, it could jeopardize future rate cuts as well. Keep an eye on gold, which continues to consolidate its lofty year-to-date gains and could gain if inflation continues to move higher in the months ahead.

• Seema Shah at Principal Asset Management:

The Fed’s ability to cut rates was resting heavily on today’s inflation print. With inflation coming in softer than expected for the fifth month in a row, it may initially seem like there is still little sign of the tariff induced boost to inflation that the Fed has been expecting. However, with increases in categories like household furnishings, recreation, and apparel, import levies are slowly filtering through to core goods prices. Indeed tariffs typically take several months to feed through to inflation data, while the significant front loading of imports implies that few goods may have been subject to tariffs yet. And while any tariff induced boost to inflation is likely to be short-lived, with higher tariffs being announced it would be wise for the Fed to remain on the sidelines for a few more months at least.

• Kay Haigh at Goldman Sachs Asset Management:

While today’s CPI release showed some early signs of tariff impact, on the whole underlying inflation remained muted. Price pressures, however, are expected to strengthen over the summer and the July and August CPI reports will be important hurdles to clear. For the time being the Fed remains in wait and see mode. Should underlying inflation, however, continue to prove benign the path remains open to a resumption of the Fed’s easing cycle in the autumn.

• Scott Wren at Wells Fargo Investment Institute:

This was a good report and overall, in line with expectations. The market is more focused on this year/year number but I will say the fact that for five straight months the month/month headline CPI number has come in below expectations. That is meaningful.

• Skyler Weinand at Regan Capital:

While it’s a relief to see Tuesday’s CPI in-line with expectations, it still showed that inflation was hotter in June than it was in May. With Tuesday’s inflation data, we are now even further from the Fed’s 2% target, which means the Fed is in no position to cut interest rates until at least September. The Fed will want to watch the next several inflation and jobs reports before it makes any moves on rates.The big question for the inflation picture is tariffs. It’s taking some time for tariffs to show up in the data, but it’s highly likely that a tariff-driven inflation reckoning is coming.

• Mabrouk Chetouane at Natixis Investment Managers:

There is nothing in this print to challenge the Fed’s strategy at the moment, particularly for July. I still find a cut would be challenging in September but that will largely depend on the job data this summer and the Fed economic outlook for the labour market.

• Neil Birrell at Premier Miton Investors:

There have been a lot of hopes pinned on US CPI coming in lower than expected. June’s data was much as expected, but core inflation undershot, just, for the fifth month on the trot. Obviously, the Fed will be looking at this, but they will want to see the PCE behaving itself before moving policy. However, there is no doubt inflation is OK for now and a September cut in rates is likely.

• Apple Inc. has struck a $500 million deal to buy rare-earth minerals from MP Materials Corp., the US producer that just last week secured backing from the Pentagon.

• CoreWeave Inc., a provider of AI computing power to companies including OpenAI Inc. and Microsoft Corp., said it plans to invest as much as $6 billion to set up a data center in Lancaster, Pennsylvania, as the firm expands its capacity across the US.

• Wells Fargo & Co. lowered its full-year guidance for net interest income, after another quarter of tepid growth amid the ongoing trade war.

• JPMorgan Chase & Co.’s investment bankers eked out a surprise gain in the second quarter, signaling what may be the start of a dealmaking rebound after widespread hesitation tied to US tariff policies.

• Citigroup Inc.’s traders rode the tariff-induced volatility in markets to their best second quarter in five years, with revenue buoyed by record trading volumes in the quarter.

• BlackRock Inc. pulled in $46 billion to its investment funds, and assets hit a record $12.5 trillion as clients rode out the volatility of President Donald Trump’s tariff policies in the second quarter.

• Bank of New York Mellon Corp.’s second-quarter profit surpassed analyst expectations as the bank continued to reinvest maturing securities at higher yields, fueling a 9% increase in revenue.

• Uber Technologies Inc. and Baidu Inc. plan to launch robotaxis on the ride-sharing platform in several markets outside of the US and mainland China through a multiyear partnership.

• Albertsons Cos. raised its sales forecast for the full year, suggesting that consumers are eating more at home to save money.

• GSK Plc shares surged after the US Food and Drug Administration published documents relating to a potential approval of the British drugmaker’s blood cancer drug.

Some of the main moves in markets:

Stocks

• The S&P 500 was little changed as of 10:54 a.m. New York time

• The Nasdaq 100 rose 0.4%

• The Dow Jones Industrial Average fell 0.6%

• The Stoxx Europe 600 fell 0.4%

• The MSCI World Index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%

• The euro fell 0.4% to $1.1618

• The British pound fell 0.3% to $1.3392

• The Japanese yen fell 0.8% to 148.85 per dollar

Cryptocurrencies

• Bitcoin fell 3.3% to $116,198.08

• Ether fell 0.6% to $2,987.05

Bonds

• The yield on 10-year Treasuries advanced four basis points to 4.47%

• Germany’s 10-year yield declined two basis points to 2.71%

• Britain’s 10-year yield advanced four basis points to 4.64%

Commodities

• West Texas Intermediate crude fell 0.5% to $66.67 a barrel

• Spot gold rose 0.1% to $3,346.97 an ounce