Tech-Fueled Rally Faces Inflation Test as US Stocks Reach New Heights
The US stock market has reached new record highs, driven by a sharp technology-led rally. The S&P 500 index rose 5.75% over four trading sessions, its biggest gain since April 2025. Tech and semiconductor shares have been leading the charge, with some of the biggest companies exceeding earnings expectations.
Economists polled by Reuters expect the Consumer Price Index (CPI) to rise 3.4% on a year-over-year basis, while core CPI is projected to increase 2.5%. The July CPI report will be closely watched for any signs that inflation may be cooling down, which could impact interest rates set by the Federal Reserve.
The Fed held interest rates steady at its last meeting but three policymakers dissented in favor of a hike. Markets are pricing in a 44% chance of a rate increase at the next meeting in September. Higher Treasury yields can make bond investments more attractive, potentially weighing on stock prices.