The three major indices of the New York Stock Exchange closed lower on the 11th (Eastern Standard Time). With heightened caution ahead of the July Consumer Price Index (CPI) announcement, comments from U.S. President Donald Trump downplaying the significance of his meeting with Russian President Vladimir Putin weakened investor sentiment.
The Dow Jones Industrial Average fell by 200.52 points (0.45%) to 43,975.09, the Standard & Poor's (S&P) 500 index decreased by 16.00 points (0.25%) to 373.45, and the Nasdaq Composite Index ended down by 64.62 points (0.30%) at 21,385.40. The market showed a steady performance with little volatility due to the holiday season, and there was a prevailing atmosphere of caution ahead of the CPI scheduled for announcement on the 12th.
The market anticipates that the July CPI will show a faster rate of increase than June. Excluding volatile food and energy prices, the core CPI is expected to rise by 0.3% month-over-month and 3% year-over-year, which are both higher than the June figures. This data will be the last CPI announced before the Federal Reserve's (Fed) Jackson Hole meeting scheduled for the 21st to the 23rd, and if it confirms worsening inflation, discussions on interest rate cuts are expected to intensify.
JPMorgan analyzed in a report that the likelihood of the July core CPI coming in hotter than expected is low, forecasting that the most likely scenario is a month-over-month increase of between 0.30% and 0.40%. They also noted that macroeconomic indicators such as the Consumer Price Index (CPI), Producer Price Index (PPI), and retail sales would continue to support a bullish rationale.
President Trump described his upcoming meeting with President Vladimir Putin on the 15th as "a chance to explore the situation," downplaying its significance. This indirectly revealed that there is still a long way to go before a ceasefire is achieved between Russia and Ukraine. Following Trump's remarks, the previously strong stock indices reversed their gains and turned downward.
By sector, all sectors except for discretionary and essential consumer goods and healthcare showed weakness. News that American artificial intelligence (AI) chip manufacturers NVIDIA and AMD would pay 15% of revenue from products exported to China to the U.S. government did not significantly impact the market. In contrast, Micron Technology saw its stock rise over 4% after raising its guidance for third-quarter earnings. The stock of the corporation holding Bitcoin, Stratus, increased by more than 1% due to the rise in Bitcoin prices.
Meanwhile, the AI corporation C3AI saw its stock plunge over 25% as its second-quarter results came in significantly lower than expected.
Trump signed an executive order extending the "tariff truce" with China by 90 days and reached an agreement to reduce the tariff rate from 145% to 115%. Under this executive order, the tariff exemption deadline is extended to November 9. Additionally, Trump announced that he would not impose tariffs on interest rates.
According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market reflects an 86.5% probability that the benchmark interest rate will be lowered by 25 basis points by September. Ahead of the CPI announcement, caution regarding interest rate stability has resurfaced, and the probability of a 75 basis point cut by December has slightly decreased to 43.9%. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) closed up 7.26% at 16.25.