[New York Stock Market] CPI Falls Short of Expectations... Broad-Based Gains

Semiconductor Stocks Rebound
Limited Gains in International Oil Prices

On the 13th (local time), all three major U.S. stock indexes rose after the June Consumer Price Index (CPI) growth rate slowed more than expected.

At 10:35 a.m. on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was trading at 52,604.67, up 106.03 points (0.20%) from the previous session. The S&P 500 Index, which focuses on large-cap stocks, rose 25.69 points (0.34%) to 7,541.03, while the technology-heavy Nasdaq increased 182.98 points (0.71%) to 26,056.166.

View of the New York Stock Exchange. New York, USA – Photo by Yoonju Hwang

This morning, attention was focused on the June CPI announcement. The U.S. Bureau of Labor Statistics reported that the June CPI rose 3.5% year-on-year. This represents a slowdown from the previous month (4.2%) and came in below the 3.8% forecast by experts surveyed by Dow Jones.

On a month-over-month basis, the CPI declined by 0.4%, which was also lower than the market's expectation of a 0.2% drop. This monthly decline was the largest since April 2020 (-0.8%) during the pandemic, marking a six-year record.

Last month's sharp drop in international oil prices following the signing of a ceasefire memorandum of understanding (MOU) between the U.S. and Iran is seen as having helped ease consumer price pressures. Energy prices fell 5.7% from the previous month, with gasoline prices especially declining by 9.7% over the same period. However, compared to a year ago, energy prices remain high, up 15.7% from last year, contributing to a higher year-on-year rise.

The core CPI, which excludes energy and food, rose 2.6% year-on-year—a slowdown from May's 2.9%. On a month-over-month basis, it held steady.

As inflation has eased, expectations for another rate hike by the Federal Reserve this year have diminished. According to FedWatch, the probability of the Fed raising rates at its July meeting dropped to 17%, down from 42% the previous day.

However, traders still expect a rate hike at the September meeting, with CNBC reporting that the probability of the target rate being raised by 0.25 or 0.5 percentage points is seen at 63%.

Skyler Winand, Chief Investment Officer at Regan Capital, said, "A lower-than-expected CPI suggests the inflation spike from the Iran war is being curbed, but given heightened recent tensions, this may be only a temporary relief."

He added, "The subdued inflation data increases the likelihood that the Fed will hold rates steady for some time and lowers the chance of a rate hike. However, Chair Walsh is trying to stabilize consumer prices, and the most effective tool the Fed currently has is a rate increase."

Semiconductor stocks also rebounded, lifting the stock market. The VanEck Semiconductor ETF (SMH) was trading more than 2% higher. Micron climbed 2.39%, Lam Research gained 3.37%, and Nvidia was up 1.56%.

Gains in international oil prices were limited. On the New York Mercantile Exchange, West Texas Intermediate (WTI) crude for the U.S. rose by 1.22% from the previous session to $79.09 per barrel. On the ICE Futures Exchange, Brent crude was up 2.03% from the previous session to $84.98 per barrel.

This content was produced with the assistance of AI translation services.