Reuters poll sees July inflation data testing record U.S. stock rally, Fed views
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Economists polled by Reuters expect the July U.S. consumer price index to rise 3.4% year-over-year, with the report due Wednesday likely to test the record stock rally that lifted the S&P 500 to an all-time high this week. The benchmark index gained 5.75% over four sessions, its best such stretch since April 2025, as tech shares surged.
July Inflation Data
The July consumer price index report, set for release on Wednesday, is forecast to show a 3.4% annual increase, according to a Reuters poll of economists. Core CPI, which strips out volatile food and energy costs, is projected to rise 2.5% year-over-year. The report follows a Federal Reserve meeting where policymakers were divided, with three of 12 voting members dissenting in favor of an immediate rate hike. The central bank has held rates steady but remains watchful as inflation persists above its 2% target.
Record Stock Rally
The S&P 500 index this week posted its first all-time closing high in two months, propelled by a surge in technology and semiconductor shares. Over four sessions ending Tuesday, the benchmark gained 5.75%, its best four-day performance since April 2025. Corporate earnings have beaten lofty expectations for a second straight quarter, fueling investor optimism. Calming tensions between the U.S. and Iran, along with a pullback in oil prices, further supported equities by easing some inflation fears.
Fed Rate Uncertainty
Market anxiety over inflation remains elevated, with some strategists warning that a hotter-than-expected CPI print could trigger a sharp sell-off. The Federal Reserve held interest rates steady at its last meeting, but a 3-to-1 dissent ratio signaled a hawkish tilt. Analysts suggest that signs of cooling inflation in recent months might be enough to prevent a rate hike this year, but the Wednesday data will be pivotal. Investors are also watching retail sales and producer price data due next week for further clues.
What's Next
The U.S. Bureau of Labor Statistics will release the July CPI report at 8:30 a.m. ET on Wednesday. Should the data come in above forecasts, market volatility could quickly erode recent gains, leaving the S&P 500's record levels vulnerable.
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Reuters poll sees July inflation data testing record U.S. stock rally, Fed views
