Stocks Surge As July Inflation Cools To 3.4% — Nasdaq Futures Jump 1.02% While Nebius Stock Rockets

July CPI came in at 3.4% year-over-year and the tape took it as permission. The Consumer Price Index for All Urban Consumers rose 0.1% on a seasonally adjusted basis in July after falling 0.4% in June, and 3.4% over the last 12 months before seasonal adjustment, per the July 2026 CPI release. That is the second consecutive month of deceleration, down from June's 3.5%, and it landed exactly where consensus sat.

Equity futures did not hesitate. S&P 500 futures traded at 7,786.00, up 38.50 points or 0.50%. Dow futures sat at 54,042.00, up 162 points or 0.30%. Nasdaq futures ripped 302.50 points to 29,928.50, a 1.02% move, while Russell 2000 futures added 18.10 to 3,053.60. The VIX bled to 15.19, off 0.09 or 0.59%, and gold pushed to $4,497.20, up $56.10 or 1.26%.

The asymmetry inside that futures board is the whole story. Nasdaq contracts outperformed the Dow by 72 basis points before the bell. Duration got paid. The long-duration growth complex — neoclouds, AI infrastructure, semiconductor capital equipment — is the direct beneficiary of a print that pulls a September hike off the front burner, and positioning reflected that within minutes of the 8:30 a.m. ET release.

The bar was set low by the calendar. This was a market that closed at records on August 7, gave some of it back across two consecutive down sessions, and walked into the print with the September FOMC framed as a coin flip. A 3.4% headline with core at 2.5% does not solve the inflation problem. It buys the Federal Reserve another month of optionality, and it buys equity holders another month of not having to price a tightening cycle restart into 2027 earnings multiples.

Underneath the index level, the single-stock tape was violent in both directions. Nebius exploded on a billion-dollar compute contract. CoreWeave printed a $104 billion backlog. Super Micro guided fiscal 2027 revenue $16 billion above where the Street had it. On Holding got smoked 20.29% on a miss. Intel cleared $20 billion of equity at $95 and absorbed 4.2% dilution without breaking. That is not a quiet tape. That is a market repricing the AI capex cycle in real time while the macro desk argues about shelter weights.

Shelter Did Two-Thirds Of The Work And Still Only Moved 0.1%

The composition of the July print matters more than the headline. The shelter index rose 0.1% in July, accounting for roughly two-thirds of the monthly all-items increase. Housing carries a third of total index weight, so a 0.1% shelter move dominating a 0.1% headline move tells you almost everything else in the basket was flat or negative.

Drill into the sub-components and the picture gets more interesting. Owners' equivalent rent rose 0.3% in July, as did the index for rent. The lodging away from home index fell 2.8% over the month. That 2.8% hotel decline is doing heavy lifting to hold the aggregate at 0.1% while the two structural rent series each ran at 0.3%. Strip out the travel-sensitive line and shelter inflation is still compounding at a 3.6% annualized clip on the core rent measures.

On the year, the shelter index increased 3.2%. That is the number Fed officials keep circling. It has been grinding lower — 3.4% on the May report, 3.3% into June, now 3.2% — but the descent is measured in tenths per quarter, not per month. At that pace shelter does not reach a level consistent with 2% headline inflation until late 2027.

Services outside energy told the same story. Services less energy services rose 0.2% on the month and 3.0% over the year. Three percent services inflation with a 3.75% upper bound on the funds rate leaves the real policy rate on services at 75 basis points. That is not restrictive by any historical standard, and it is precisely the argument the three dissenters at the last FOMC meeting have been making.

The goods side gave the print its cushion. Commodities less food and energy commodities rose 0.2% on the month but 0.8% over the year. New vehicles added 0.1% monthly and 0.5% annually. Used cars and trucks rose 0.4% on the month while remaining down 1.9% year-over-year. Apparel added 0.1% monthly against 3.9% annually. Medical care commodities fell 0.6% on the month and 2.7% over the year. Goods disinflation is the only thing keeping the aggregate from printing above 4%, and goods disinflation is a function of demand, not policy patience.

Energy Dropped 1.5% While The Annual Rate Sits At 14.7%

The energy line is where the July print diverges hardest from the forward risk. The energy index decreased 1.5% in July after falling 5.7% in June. The gasoline index decreased 2.9% over the month, and before seasonal adjustment gasoline prices decreased 2.1%.

That is the rearview mirror. The energy index increased 14.7% over the past 12 months, driven in large part by gasoline rising 24.6% over the same period. Energy commodities are up 24.7% annually. Fuel oil is up 39.1% year-over-year even after falling 1.7% in July.

The forward problem is priced into crude right now, not into last month's survey. Iranian official Mohsen Rezaei stated the Strait of Hormuz stays closed until Washington meets Tehran's conditions, with Brent crude futures at $89.65 per barrel and WTI at $84.00. Brent touched $90 Wednesday morning while U.S. crude pushed toward $84, and the national regular gasoline average hit $4.03 per gallon.

A $4.03 pump price feeding into the August survey against a July gasoline index that fell 2.9% sets up a mechanical reversal. The July energy drag is not repeatable. It is the product of a June collapse working through the seasonal adjustment, and crude has spent every session since building the case for the opposite sign next month.

The utility side stayed firm. Natural gas increased 0.7% in July and electricity rose 0.1%, with the natural gas index up 4.3% and electricity up 4.2% over the 12 months ending July. Energy services added 0.3% monthly against 4.3% annually. Grid and pipeline costs are compounding at double the Fed's target while the volatile motor fuel line masks it.

Washington enforced the blockade by firing on a Panama-flagged vessel attempting to cross the Gulf of Oman on Tuesday. That is the backdrop propping up both crude and the long end of the Treasury curve. Any resolution collapses the energy premium and hands the Fed a clean disinflation runway. Any escalation puts a 5% headline CPI print on the table by November. The July report is silent on which one happens, and that silence is why the 30-year refuses to break below 5.20%.

Core At 2.5% Hands Warsh The Argument He Needed

Core inflation is where the doves got their ammunition. The index for all items less food and energy rose 0.2% in July after being unchanged in June, and 2.5% over the past 12 months following a 2.6% increase over the 12 months ending June.

A 2.5% core print with a funds rate at 3.50–3.75% means the real policy rate on the Fed's preferred underlying measure sits between 100 and 125 basis points. That is restrictive. It is the cleanest argument available against a September hike, and it is why traders tilted toward a hold after walking in on a 50-50 split.

The composition is messier than the headline. The index for airline fares increased 2.2% over the month after rising 0.2% in June, and is up 25.5% over the last year. That 25.5% annual figure is a direct jet fuel pass-through and it will not moderate while Brent trades at $90. The medical care index increased 0.4% in July after falling 0.1% in June, with hospital services up 0.5% and physicians' services up 0.2%, while prescription drugs decreased 0.8%. The communication index rose 0.6%, education increased 0.5%, and recreation rose 0.2%.

Four of the five largest core services categories accelerated month-over-month. The only thing holding core at 0.2% was the goods complex and a single insurance line: motor vehicle insurance declined 0.3% in July after falling 2.0% in June.

Food stayed contained. The food index rose 0.1% after rising 0.2% in June, with food at home down 0.1% and food away from home up 0.3%. Grocery deflation came from protein and produce — meats, poultry, fish and eggs fell 0.7% as pork declined 1.5%, and fruits and vegetables fell 0.1% as lettuce dropped 16.4%. Food away from home is up 3.4% annually against 2.7% for food at home, the widest wedge in the report.

Index levels for the record: CPI-U printed 333.918 on the 1982–84 base, CPI-W hit 327.104 with the same 3.4% annual gain, and the chained C-CPI-U rose 3.3%. The next release drops September 11, five days before the FOMC votes.

Tuesday's Tape Closed Red Across Three Of Four Benchmarks

The market walked into the print off back-to-back losses. The S&P 500 declined 0.32% to end Tuesday at 7,728.20, while the Nasdaq Composite shed 0.6% to settle at 26,445.45. The Dow Jones Industrial Average lost 184.13 points, or 0.34%, to close at 53,791.85.

Monday was the first leg down. The S&P 500 slipped 0.06% to 7,753.11, the Nasdaq Composite declined 0.32% to 26,605.36, and the Dow fell 60.95 points or 0.11% to 53,975.98. Two sessions took 24.91 points off the S&P and 245.17 points off the Nasdaq Composite.

Both declines came off record territory. Friday, August 7 closed at records across the board, with the S&P 500 at 7,757.64 up 0.62%, the Nasdaq adding 1.3% to 26,690.62, and the Dow gaining 0.28% to 54,036.93. That puts Tuesday's S&P close 29.44 points below the record and the Dow 244.85 points below its own.

Small caps broke the pattern. The Russell 2000 traded at 3,031.67, up 14.27 points or 0.47%, late in Tuesday's session while the three large-cap benchmarks bled. That rotation — small caps bid, mega-cap tech offered — is a rate-sensitivity trade. The Russell carries the highest floating-rate debt exposure of the four indices, and it caught a bid the moment the market started pricing a Fed hold instead of a hike.

The volatility complex never panicked. The VIX closed Tuesday's session at 15.34, down 0.12 or 0.78%, and slipped further to 15.19 in Wednesday's premarket. A 15-handle VIX into a CPI print carrying genuine two-sided FOMC risk is a market that had already made up its mind about the outcome. Options desks were not paying for protection.

Gold ran the other way. The metal traded at $4,431.00, up $11.30 or 0.26%, during Tuesday's session before ripping to $4,497.20 post-print, a $66.20 move inside 18 hours. Bullion up 1.26% on a cooling inflation print is not an inflation trade. It is a policy-error trade and a Hormuz trade, and both are live.

The Curve Pinned Itself Flat Ahead Of The Release

Treasuries went into the print with no directional conviction whatsoever. The 10-year note yield sat flat at 4.682%, the 2-year flat at 4.212%, and the 30-year bond unchanged at 5.231%.

That flatness followed two sessions of genuine movement. The benchmark 10-year gained more than 4 basis points to 4.705% Monday, the 30-year traded up more than 4 basis points to 5.251%, and the 2-year rose more than 3 basis points to 4.241% as crude ripped toward $80. The 10-year then fell to 4.68% Tuesday after rising above 4.71% the previous day, as oil steadied on signs of diplomatic movement.

The 2s10s spread sits at 47 basis points. The 10s30s spread sits at 54.9. A curve that steep at the long end with the front end anchored above 4.20% is telling you the market's problem is not the next 25 basis points of policy. It is the terminal inflation rate over a decade, and $90 Brent with a closed Hormuz is the reason.

Thirty-year yields at 5.231% sit near the highest levels in two decades. That is the number that matters for equity multiples. Every 10 basis points on the long bond compresses the justified P/E on a 30-year duration cash flow stream by 2%, which is why Nasdaq futures outperformed by 72 basis points the second the print cleared: a Fed hold means the long end has a ceiling, and a ceiling on the long end is a floor under growth multiples.

The dollar had already positioned for this. The dollar index slipped to 99.6 on August 10, its weakest since early June, after a July jobs report that landed like a cold bucket of water on rate-hike expectations, while the euro climbed to $1.1558, its strongest since mid-June. The 10-year had fallen to 4.637% on that repricing before crude dragged it back above 4.70%.

Two forces, opposite signs: a labor market shedding jobs pulls yields down, a closed strait pushes them up. July CPI resolved neither. It removed the tail case where the Fed had to move in September regardless of the data.

September Odds Flipped From Coin Toss To Hold

The rate-hike probability trade has been whipsawing for a week. Traders were pricing a 52% chance the central bank raises rates at its September meeting, down from a 67% reading a week prior, after the July payrolls report showed the economy shedding 23,000 jobs instead of adding them.

Tuesday saw the odds tick back up. Markets priced a 51% probability of a 25 basis point hike in September, up from 44% a day earlier, as crude firmed. Prediction markets sat lower, with a 36% probability on a quarter-point hike against 63% for no change.

Then the print hit and the balance shifted. Following the inflation data, traders tilted their bets toward the Fed holding rates steady after the 50-50 split the day before. A 2.5% core reading is hard to hike into, even with energy running at 14.7% annually.

The internal politics complicate it. Three dissenters at the last meeting voted to raise rates, and the September 15–16 FOMC is the next live decision after August's pause. A hotter print would have handed Chair Kevin Warsh the cover to move, with crude up 21% in July after the Iran conflict disrupted energy markets. The print was not hotter. That removes the immediate forcing function without removing the risk.

What it does not remove is the sequencing. August PPI and PCE land before the FOMC, and both carry more energy pass-through than a July CPI survey that captured a 2.9% gasoline decline. Long-term inflation swaps still imply 2.4% average inflation, and 30-year yields hover near 20-year highs.

The neutral-rate argument frames the standoff cleanly. With the funds rate at 3.50–3.75% and headline at 3.4%, the real policy rate on headline inflation runs between 10 and 35 basis points. On core it runs 100 to 125. Which number the Committee weights determines whether September is a hold or a hike, and July CPI just handed both camps fresh ammunition. Watch the 51% figure into Friday. A break below 35% takes the Nasdaq Composite through 26,690.62.

CoreWeave's $104 Billion Backlog Resets The Neocloud Trade

CoreWeave printed the quarter that validated the entire neocloud capital structure. Shares jumped 14% in extended trading Tuesday after the AI infrastructure provider reported an adjusted loss of $1.03 per share against a $1.20 expected loss, on revenue of $2.58 billion versus $2.56 billion expected. Revenue climbed 112% from a year earlier, while net loss of $626 million widened from $290 million, or 60 cents per share, a year ago.

The backlog is the number that moved the stock. Revenue backlog now stands at $104.2 billion, a figure that excludes over $25 billion in new commitments booked in the first weeks of the third quarter. Against Q1's $99.4 billion backlog, that is $4.8 billion of sequential growth on the reported figure and roughly $30 billion including the post-quarter adds.

Guidance went up across every line. Q3 revenue is guided to $3.45 billion to $3.6 billion with adjusted operating income of $200 million to $260 million, interest expense of $860 million to $940 million, and CapEx of $11.5 billion to $13.5 billion. Full-year 2026 revenue was raised to $12.4 billion to $13.2 billion, adjusted operating income raised to $960 million to $1.15 billion, and CapEx guided to $35 billion to $39 billion. The year-end active power target went up to more than 1.85 GW. Adjusted operating income reached $128 million in the quarter with margins expanding sequentially.

The funding gap is the counterweight. CoreWeave is carrying $35 billion in debt. Liabilities reached $50.8 billion against $4.76 billion of equity, and free cash flow ran negative $4.71 billion in Q1 alone against $7.7 billion of quarterly CapEx. Interest expense guided at up to $940 million for a single quarter against $200–260 million of adjusted operating income is a structure that only works if the backlog converts on schedule.

New business with Anthropic and Meta landed in the quarter, and the $21 billion Meta commitment signed in March anchors the book. Management continues targeting an $18–19 billion exit revenue run rate by the end of 2026. The stock traded at $90.32, up $2.13 or 2.42%, in Wednesday's premarket after giving back most of the after-hours spike, still well below the $136.80 print in May.

Super Micro Guided Fiscal 2027 Sixteen Billion Above The Street

Super Micro missed on revenue and the stock ripped anyway, because the guide was a different order of magnitude. Q4 revenue came in at $11.1 billion against $11.551 billion expected, while earnings per share hit $1.62 versus $0.96 expected.

The margin line explains the EPS beat. Gross margins in Q4 improved to 17.5%, a 760 basis point improvement from the 9.9% posted in Q3. That was pre-announced: GAAP and non-GAAP gross margins were estimated in the range of 15% to 17%, significantly higher than guidance of 8.2% to 8.4%, primarily due to favorable customer and product mix, per Supermicro's Q4 preliminary business update. That shift added $847 million in gross profit.

The forward numbers are where it got loud. Fiscal 2027 net sales are guided to $65 billion to $72 billion against $52.501 billion expected. Q1 2027 sales are guided to $14.5 billion to $15.5 billion versus $11.68 billion expected, with Q1 EPS of $0.89 to $0.98 against $0.76 expected. The midpoint of the FY27 revenue guide sits $16.2 billion above consensus.

Order flow backs it. Backlog grew to record levels after total new orders exceeded $60 billion during the fiscal fourth quarter, a book that includes a co-build with SpaceX and xAI. Against $11.1 billion of quarterly revenue, that is more than five quarters of contracted demand sitting in reserve.

The balance sheet is the risk. Total debt and convertibles ballooned to $8.8 billion against $1.290 billion in cash, and the insider lock-up expired August 10 with 65 recent insider transactions skewed toward sales. Any refinancing hint moves the stock hard in either direction.

Shares traded up 6.23% at $33.57 in the after-hours session after closing the regular day at $31.68, up $0.22 or 0.70%, on 58.888 million shares against a 53.923 million three-month average, with a market cap of $20.493 billion and a trailing P/E of 16.49. A 16x multiple on a company guiding revenue to roughly double is the cheapest large-cap AI infrastructure print on the board, and the stock still sits 46% below its 52-week high of $58.78.

Nebius Exploded On A Billion-Dollar Compute Contract

Nebius was the single biggest mover of the premarket session. The company locked a multi-year computing power agreement with Reflection AI worth over $1 billion through 2029, and the stock was trending up 10.69% as of 7:48 a.m. ET Wednesday.

The Tuesday close sets the base. NBIS finished at $193.23, up $9.12 or 4.95%, sitting slightly below its 20-day moving average of $193.63 and far below its 60-day moving average of $220.24.

The 52-week range tells you what kind of instrument this is. The stock has traded between $62.01 and $299.86 over the past year. NBIS is up 184.3% over 52 weeks and 121.8% in 2026, hit an all-time closing high of $299.86 on June 22, and earned a spot in the Nasdaq-100 Index in June. It also fell 31% in a single month during that run, and has printed an 18.8% single-session surge followed by sharp reversals with no fresh negative company news attached.

Q2 numbers land today. Consensus has revenue at $576.67 million, up from $105.10 million a year earlier — a fivefold gain — with an expected loss of 73 cents per share against a 38-cent loss a year ago. Adjusted losses are expected in the $0.69 to $0.72 range as the company prioritizes capacity investment over profitability. The critical post-earnings resistance level sits at $220 to $223. Consensus carries a Buy rating with an average price forecast of $232.08 across 20 analysts, and full-year 2026 loss per share is modeled to narrow 11.3% to $1.57.

The structural read matters more than the print. New York's one-year moratorium on new hyperscale data centers adds regulatory noise while underlining the intensity of structural demand for AI capacity, with Nebius grouped alongside CoreWeave as a neocloud positioned to benefit as data-center capital shifts toward permissive jurisdictions. Power availability, not GPU supply, is the binding constraint on the entire complex now, and Nebius is building vertically integrated capacity across Europe and North America against long-term commitments from major tech customers. Vineland buildout delays remain the bear case.