Global Inflation Data Impacts Stocks and Economy

The U.S. consumer price index (CPI) for June matched expectations, rising to a four-month high, with both headline and core inflation numbers hitting their highest since February on an annual basis. The core inflation rate was slightly lower than expected, rising 0.2% on the month. Despite meeting expectations, the inflation figures weighed on stocks, which mostly fell on the news. Other market highlights included the Nasdaq Composite hitting a record high driven by a 4% jump in Nvidia, ASML's strong second-quarter earnings, and fund managers being bullish on European stocks.

US stock futures fell on Tuesday evening as investors waited for earnings releases from major banks and the latest wholesale inflation report. The S&P 500 and Dow Jones Industrial Average lost ground in the regular trading session, with the Dow falling over 400 points, while the Nasdaq Composite rose 0.2% to a record close. The consumer inflation report showed a 0.3% monthly increase and a 2.7% 12-month rate, in line with expectations, and fueled concerns about the impact of President Trump's tariffs. Investors are also awaiting the producer price index report on Wednesday, with estimates calling for a 0.2% monthly increase. Major banks, including Bank of America and Goldman Sachs, reported earnings, and shares of asset managers rose on a report that the Trump administration may allow private market investments in 401(k) plans.

European markets are expected to open flat to lower on Wednesday, following a difficult start to the week amid concerns over global growth and a potential EU-US trade tariff. The UK's annual inflation rate hit 3.6% in June, higher than the expected 3.4%. ASML reported second-quarter earnings that beat estimates but missed revenue guidance for the current quarter and warned of possible no growth ahead. Key data and earnings releases are expected today, including EU trade data and results from Richemont and Handelsbanken.

The UK's annual inflation rate rose to 3.6% in June, exceeding expectations of 3.4%, driven by motor fuel prices and food price inflation. The data will be closely watched by the Bank of England ahead of its next meeting in August, where economists expect a 25 basis point interest rate cut due to the UK's lackluster economic growth and high inflation.