Tame CPI Adds to Early Stock Gains on AI Earnings
August 12, 2026
The July Consumer Price Index rose 0.1% and core inflation was up 0.2%, which Schwab experts say may keep the Fed on hold. A $42 billion 10-year Treasury auction is on tap today.
Published as of: August 12, 2026, 9:11 a.m. ET
Listen to this update
Listen here or subscribe to the Schwab Market Update in your favorite podcast app.
| The markets | Last price | Change | % change |
|---|---|---|---|
| S&P 500® Index | 7,728.20 | -24.91 | -0.32% |
| Dow Jones Industrial Average® | 53,791.85 | -184.13 | -0.34% |
| Nasdaq Composite® | 26,445.46 | -159.91 | -0.60% |
| 10-year Treasury yield | 4.66% | -0.03 | -- |
| U.S. Dollar Index | 99.70 | -0.13 | -0.13% |
| Cboe Volatility Index® | 15.11 | -0.17 | -1.11% |
| WTI Crude Oil | $83.58 | +$0.38 | +0.46% |
| Bitcoin | $64,150 | +$550 | +0.86% |
(Wednesday market open) Inflation stayed tame in July. The headline Consumer Price Index (CPI) rose 0.1% monthly and core CPI, excluding food and energy, climbed 0.2%, in line with consensus. Major indexes—already up thanks to strong AI-related earnings—extended gains after the data, freed for now from rate hike worries, though more inflation readings arrive tomorrow.
"The report likely doesn't change the narrative for the Fed," said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "We expect the Fed to remain on hold for the time being. They are closely focused on their inflation mandate and given this was as expected, it gives them time before making the next move."
On Tuesday, the S&P 500 Index posted its fourth loss in the last five sessions after last week's sharp rally to record highs. Volume was light on the downturn after surging during the climb, possibly a sign that positive conviction persists. After the close, CoreWeave (CRWV) and Super Micro Computer (SMCI) reported impressive earnings that reflected solid AI demand and lifted the entire Nasdaq early today before CPI. Meanwhile, there's no progress on Iran, news reports said, and crude rose to nearly $84 per barrel.
To get the Schwab Market Update in your inbox every morning, subscribe on Schwab.com.
Three things to watch
- CPI deeper dive: Annual CPI rose 3.4% in July, in line with expectations and down from 3.5% in June and 4.2% in May. Core rose 2.5% year over year, matching consensus and down from 2.6% in June. Breaking down the report, food only rose 0.1% month over month, driven by food at home. Commodities also saw some improvement, but a 0.3% monthly rise in owners-equivalent rent wasn't a bright spot and isn't likely to improve given the rise in mortgage rates. "Additionally, it's one report and although it doesn't ring the alarm bells for inflation, it also doesn't suggest inflation moving lower toward the Fed's 2% target," my colleague Howard added. July's Producer Price Index (PPI), which tracks wholesale prices, is due at 8:30 a.m. Thursday. Consensus is for a 0.1% monthly rise in headline PPI and a 0.3% increase in core, according to Briefing.com. The June numbers were -0.3% and 0.2%, respectively, with total PPI up 5.5% year over year. As pressure builds on Fed, next month could be its last chance until December to adjust rates, because the late October meeting occurs just before the mid-term elections.
- Treasuries cast eye on Japan as auctions roll along: Today brings a $42 billion 10-year Treasury note auction, with results due at 1 p.m. ET. Japan is a significant holder of Treasuries, and its recent yen buying raises concerns that Tokyo might sell Treasuries to cover yen purchases. The yen fell again after rising slightly last week when the U.S. helped Japan buy yen in a rare move. "Intervention by the U.S. to support the yen has elevated concerns about the unwinding of 'carry' trades, but also broader concerns about other central banks' holdings of Treasuries, putting more upward pressure on yields," said Liz Ann Sonders, chief investment strategist at SCFR. The "carry trade" refers to Japanese purchases of U.S. assets including stocks and Treasuries. A feared unwinding in 2024 put U.S. stocks into a short tailspin. Japan—the largest international holder of U.S. Treasuries—reduced holdings by 11.7% last year, according to the last U.S. Treasury International Capital report. The next monthly report bows Monday. Any slower demand in today's 10-year auction might raise concerns about higher borrowing costs.
- Earnings from Cisco awaited, while Nvidia investment shares results: Cisco reports with shares relatively flat since early June, though they revived a bit recently. When Cisco reported in mid-May, shares enjoyed a pop as the company reported surging AI orders and said it was cutting almost 4,000 jobs. Cisco builds networking hardware including routers and switches and has exposure to AI and cybersecurity, making it a useful barometer of technology demand. It will likely emphasize AI trends. Meanwhile, the much smaller Nebius (NBIS) reported this morning and saw shares soar 13% ahead of the open. Nvidia (NVDA) invested a 9% stake to help Nebius develop its hyperscale cloud for the AI market, which is characteristic of a recent trend toward heavy tech hitters buying shares of companies they partner with. The nearly 50% S&P 500 annual second quarter earnings growth partially reflects investment gains generated by shares owned by Magnificent Seven companies. It's important to extract those earnings gains from organic business growth when evaluating tech results.
On the move
- Immediately after CPI, odds of a September Fed rate hike fell to 41% from 50% yesterday, according to the CME FedWatch Tool.
- CoreWeave (CRWV) surged 18% after the cloud infrastructure firm reported strong quarterly revenue growth that topped Wall Street's forecasts and a narrower-than-expected loss. The company also issued better-than-expected guidance and said it has a $100 billion backlog.
- Super Micro Computer (SMCI) climbed almost 10% as earnings per share for the server maker topped estimates and the company gave guidance that topped the range seen by analysts, spurred by rising AI demand and a long list of new customers.
- Lumentum (LITE) added 8% after beating analysts' estimates for quarterly results and offering fiscal first quarter guidance, buttressed by solid AI-related demand.
- Applied Digital (APLD), a data center designer, soared 7% after beating analysts' earnings expectations and reporting an annual revenue gain of more than 400%.
- Nvidia rose 1.3% early, lifted partly by Nebius results and by the strong AI demand evident in earnings from CoreWeave.
- SpaceX (SPCX) rose 1% after launching 24 Starlink satellites to low-Earth orbit overnight, Barron's reported. This came after the stock fell sharply yesterday on profit taking and finished below its initial public offering price.
- Cava Group (CAVA) posted 17% gains early, driven by better-than-expected quarterly revenue and traffic into its restaurants. Sales at restaurants open a year or more rose 9%, helped in part by higher prices.
- Private equity firms led Tuesday's gains in financials, a sector that's risen 10 weeks in a row. An 11th would be a record, CNBC noted. Shares of KKR (KKR), Blue Owl Capital (OWL), and Apollo Global Management (APO) led, lifted by improved earnings and Nvidia's announcement Monday that it's teaming with financial firms to raise $500 billion for the AI build-out.
- On Holding (ONON) plunged 20% Tuesday after the shoe and sportswear firm missed analysts' estimates for quarterly revenue and cut guidance. Weakness dragged competitor Nike (NKE), which fell almost 2% yesterday. Dick's Sporting Goods (DKS) shed 4% this morning and American Eagle Outfitters (AEO) fell 5%.
- Under Armour (UAA) plunged 9% after Barclays downgraded shares to underweight from equal weight, citing the company's "delayed brand recovery in a competitive athletic sector.
- AppLovin (APP) fell nearly 6% Tuesday after Bank of America downgraded shares to neutral from buy, citing risks to long-term revenue growth.
More insights from Schwab
Concentration risks abound but diversification possible: Broad global equity indexes are more concentrated due to an increased weight of the info tech and communication services sectors and recent capital investment related to AI. Even so, investors seeking diversification can find ways even in this era, our experts explained in a new look at international trends.
Gen X bought July dip: Schwab clients remained net buyers in July despite choppy markets, pushing the Schwab Trading Activity Index™ to its highest level since January 2022. Gen X continued to show the strongest bullish conviction among generations, increasing their buying even as younger investors became more cautious.
Chart of the day
Data source: Cboe. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
The Cboe Volatility Index (VIX—candlesticks) stayed well under 16 Tuesday—near the recent long-term low of 14.77 and below the 50-day moving average (blue line)—even with stocks down for the fourth day in five. This implies disconnect, as participants don't appear eager to pay for downside protection. VIX is in contango, with future contracts above the spot price, implying some traders see volatility climbing. That's arguably bearish for stocks.
The week ahead
Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.
August 13: July Producer Price Index (PPI) and core PPI and expected earnings from Brookfield (BN), NetEase (NTES), JD.com (JD), Tapestry (TPR), Applied Materials (AMAT), and Nu Holdings (NU).
August 14: University of Michigan preliminary August consumer sentiment.
August 17: No major earnings or data expected.
August 18: July housing starts and building permits, July industrial production, and expected earnings from Home Depot (HD), Baidu (BIDU), and Toll Brothers (TOL).
August 19: FOMC minutes and expected earnings from Analog Devices (ADI), TJX Companies (TJX), Lowe's (LOW), Target (TGT), and Estee Lauder (EL).