U.S. stocks finished mixed and government bond yields edged lower on August 12, 2026, after consumer prices increased 0.1% in July, matching economists’ expectations. The mild inflation report cooled rate-hike expectations from the Federal Reserve, while global equities and oil prices reacted to ongoing geopolitical tensions and upbeat tech earnings.
Mild July CPI Cools Rate Hike Expectations
On an annual basis, consumer prices increased 3.4%, down from 3.5% in June.
The in-line inflation reading served as a critical data point for investors ahead of the central bank’s policy meeting next month. Traders remain divided on whether monetary policy officials will hold interest rates steady or implement a quarter-percentage-point increase. However, expectations that the Federal Reserve will stand pat increased slightly following the consumer price index release.
The data “relieves some of the concerns that the Fed is being pushed toward a rate hike due to inflation, which is being fueled by higher energy prices,”
Robert Pavlik, senior portfolio manager at Dakota Wealth Management in Fairfield, Connecticut
Money markets had priced in roughly a 50% chance of a rate hike heading into the data release as reported by Reuters, but the mild figure immediately dented those aggressive bets and helped lift U.S. Treasuries, driving yields lower.
Global Markets and Commodity Pressures
Away from U.S. inflation figures, global equities saw mixed movement while oil prices swung in volatile trading sessions. Markets continued monitoring the deadlock in U.S.-Iran negotiations and shipping threats in the Strait of Hormuz, where both the U.S. and Yemen’s Iran-aligned Houthis reported separate vessel attacks.
Despite supply worries, oil prices faced downward pressure earlier in the day as forecasters cut global demand projections. Brent crude dipped below $90 a barrel before recovering slightly, while U.S. crude futures also posted modest gains as tracked across major trading desks.
“Our base case for a long time has been a gradual but messy de-escalation,” said Dorian Carrell, head of multi-asset income at Schroders. “We don’t expect traffic (through the Strait of Hormuz) to go to its full capacity. We think that puts a floor on the oil price and maintains an energy-driven inflationary driver in markets in the near- to medium-term.”
Dorian Carrell, head of multi-asset income at Schroders
Meanwhile, precious metals capitalized on the weaker dollar and fading rate-hike expectations.
Wall Street Index Divergence and Tech Sector Support
On Wall Street, major indexes finished mixed as investors digested corporate earnings alongside the macroeconomic data. The Nasdaq Composite led the gains, finishing up 0.5% driven by a continued boost in the artificial intelligence trade. Upbeat results from cloud-computing company CoreWeave and server provider Super Micro Computer provided vital support to tech stocks.
The benchmark S&P 500 gained 0.3%, closing higher for the first time in three sessions noted CNBC in its market updates. In contrast, the Dow Jones Industrial Average slipped less than 0.1%, weighed down by mixed corporate reports from firms such as Cisco Systems, Cerebras, and Coherent.
With July producer price numbers and retail sales data slated for release later in the week, traders continue to weigh whether incoming economic indicators will validate a permanent pause in central bank rate hikes or merely delay tightening measures into the final months of the year.
