The July consumer inflation report released Wednesday confirmed a continued cooling trend in price increases across the economy, with the headline Consumer Price Index (CPI) coming in at 2.9% year-over-year, slightly below both the previous and expected 3%.

Core inflation, which excludes food and energy, also saw a modest decline from 3.3% to 3.2% year-over-year, aligning with economists’ forecasts.

For investors, this signals that the Federal Reserve may have the green light to cut interest rates in September. However, the odds of a 25 basis point hike are slightly higher than those of a 50 basis point cut.

Wall Street had a mixed response to the data. Major indices initially rose around 10 a.m. E.T. before flattening out by midday trading in New York.

Both S&P 500 and Nasdaq 100 are striving to secure their fifth consecutive sessions in the green.

Financial stocks outperformed among the 11 sectors of the S&P 500. The biggest laggards were communication services, weighed down by a decline in Alphabet Inc. GOOGLGOOG, and consumer discretionary, dragged by Tesla Inc. TSLA and Starbucks Inc. SBUX.

Long-dated Treasury yields fell by 4 basis points, boosting the iShares 20+ Year Treasury Bond ETF TLT by 0.6%.

The U.S. dollar index, as tracked by the Invesco DB USD Index Bullish Fund ETF UUP, remained steady, while gold eased by 1%.

Oil prices, tracked by the United States Oil Fund USO, declined by 1.1%, marking the second consecutive session of losses.

Bitcoin BTC/USD dropped 2.4% to $59,100.

Wednesday’s Performance In Major US Indices, ETFs

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY was 0.1% higher to $542.64.
• The SPDR Dow Jones Industrial Average DIA rose 0.4% to $399.25.
• The tech-heavy Invesco QQQ Trust Series QQQ eased 0.1% to $461.91.
• The iShares Russell 2000 ETF IWM tumbled 0.9% to $206.01.
• The Financials Select Sector SPDR Fund XLF outperformed, up by 0.8%. The Consumer Discretionary Select Sector SPDR Fund XLY lagged, down by 0.8%.

Wednesday’s Stock Movers

• Kellanova K surged 7.7% after the company announced it would be acquired by Mars in an all-cash deal valued at $35.9 billion.
• Alphabet Inc. fell nearly 3% after reports that the U.S. Department of Justice may break up Google following a recent ruling that it monopolized the online search market.
• Charles Schwab Corp. SCHW jumped over 4% after reporting that total client assets reached $9.572 trillion in July, up 16% year-over-year and 2% from June, with core net new assets surging 112% to $29 billion compared to July 2023.
• Other financial stocks marking strong gains on Wednesday included The Allstate Corp. ALL, The Progressive Corp. PGR and Morgan Stanley MS up 5%, 4.8% and 3.2%, respectively.
• Stocks moving on earnings report were Cardinal Health, Inc. CAH, up 4%, Brinker International, Inc. EAT, down 14% and Performance Food Group Company PFGC up 8%.
• Those reporting after the close include Cisco Systems, Inc. CSCO and Lumentum Holdings Inc. LITE.

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This photo was created using artificial intelligence MidJourney.