U.S. Futures & World Markets

Tuesday's cooler-than-expected inflation reading had investors in a good mood, and the market is trying to build off that momentum this morning. The wildcard remains the Middle East — fresh attacks on Iran are back in focus. Lower inflation data signals less of a chance of rate hikes, but if oil prices spike, it could quickly offset the positive inflation news.

On inflation data, we'll get the PPI (Producer Price Index) reading at 8:30 am ET. Fed Chair Warsh has been clear that bringing down inflation is his number one priority, and yesterday's print helped his case for doing nothing as he eases into the role. Still need to figure out a nickname for Warsh — although I have a feeling nothing will ever top "The Godfather" for Powell.

Big Bank earnings were stellar yesterday. Goldman Sachs and JPMorgan hit all-time highs after reporting, another sign of strength in the overall tape beyond the AI trade.

Datatrek highlighted the rotation theme last night: "It's been a sleepy 2 months for the S&P 500 (+0.6%), but under the surface there have been a healthy series of rotations. Financials are up +9.5%. Health Care has rallied +8.0%. The Russell has gained +3.6%. Once sure-thing AI plays have languished (Nvidia -10.2%, Alphabet -10.0%) and AI laggards have caught a bid (Meta +6.9%, Apple +5.6%)." If you're getting whiplash, you're not alone. Fortunately, long-term investors don't have to win every daily rotation to come out ahead.

S&P Futures vs. Fair Value: +14.00  |  10-Year Yield: 4.61%

CORE Headlines

Charts & Data

Companies adopting AI heavily grow headcount 10% over two years following adoption. Torsten Slok, Apollo (citing Ramp study of 21,559 US firms): "Entry-level jobs rise by about 12%, suggesting that heavy AI investment is complementing workforce growth rather than replacing workers."

US consumer prices declined in June for the first time in six years — a key gauge of underlying inflation was little changed. Bloomberg via Daily Chartbook: "Taking some pressure off the Federal Reserve to raise interest rates."

Markets dial back July rate hike expectations following mild CPI report. Daily Chartbook: the inflation print shifted the probability distribution meaningfully toward a hold.

Inflation just saw its largest month-over-month drop in 5 years — stocks tend to like that, especially over the next 3-6 months. Jason Goepfert via Daily Chartbook: a historically bullish setup for equities from this inflation catalyst.

Fed mandate and Fed speak — first double-negative surprise of 2026. Michael Kantro via Daily Chartbook: "I expect the Fed's tone to continue following surprises in labor and inflation data, which have now seen the first double-negative surprise of 2026."

For US consumers, wholesale gasoline futures are signaling the national average gas price will move above $4/gallon this month. Bespoke Investment Research: "Unless oil reverses lower quickly." A headwind to watch for consumer spending and sentiment.

Short-term and intermediate-term sentiment composites were in excessive optimism zones — the market wasn't in a great position to digest bad news. @edclissold via Daily Chartbook: the geopolitical catalyst hit at a particularly vulnerable moment in the sentiment cycle.

Positioning on US equities is now at its highest level since December 2024 — a net 24% overweight. BofA Fund Manager Survey via Daily Chartbook: professional investors are increasingly committed to the US equity story.

The most crowded trade, as perceived by global fund managers, continues to be long global Semis. Thomas Thornton, Hedge Fund Telemetry via Daily Chartbook: the crowded trade is always the one that causes the most pain when it reverses.

The corporate buyback window is beginning to reopen — bringing the market's largest structural buyer back into equities. Scott Rubner, Citadel via Daily Chartbook: a meaningful technical tailwind re-entering the market as earnings season progresses.

Retail remains the strongest structural buyer of US equities — deploying capital at ~3.2x the historical monthly average. Scott Rubner, Citadel via Daily Chartbook: "Has retail started selling equities? No." The most persistent bull market support mechanism continues.

Retail call buying in mega-cap Tech jumped to near a YTD high — call buying at 56% of all retail opening trades on Cboe's exchanges on Friday. Manish Xu, Cboe via Daily Chartbook: retail is back chasing upside in tech after a brief wobble.

The S&P 500 has gained just 0.19% since the 20-day breadth thrust regime ended on May 14 — spending two months grinding sideways near its highs. Grant Hawkridge via Daily Chartbook: not a breakdown, not a breakout. Patience required.

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