Stocks finished mostly higher on Wednesday, with the S&P 500 (+0.3%) and Nasdaq Composite (+0.5%) posting modest gains while the DJIA ended flat. Trading remained confined to relatively narrow ranges throughout the session as an in-line inflation report cleared the week's biggest macro hurdle without producing a major directional move.

The July Consumer Price Index matched expectations, with headline CPI increasing 0.1% and core CPI rising 0.2%. The lack of an upside surprise helped temper concerns about additional Fed tightening, with the CME FedWatch tool assigning a 60.1% probability to the FOMC leaving rates unchanged in September, up from 51.6% yesterday.

With the highly anticipated report offering little reason to alter the broader market outlook, attention quickly shifted back toward individual stocks and sectors. That was particularly evident in the information technology sector (+1.1%), which led the market as enthusiasm returned to semiconductor and AI-related names. The PHLX Semiconductor Index jumped 2.5%, with strong post-earnings reactions in CoreWeave (CRWV 107.73, +17.41, +19.28%), Super Micro Computer (SMCI 37.55, +5.95, +18.83%), and Lumentum (LITE 932.47, +111.88, +13.63%) reinforcing enthusiasm surrounding continued AI infrastructure spending.

Outside the information technology sector, SpaceX (SPCX 146.22, +12.93, +9.70%) was another momentum standout, surging after introducing Grok 4.6.

The real estate sector (+1.1%) matched information technology for the day's best performance amid some modest easing in Treasury yields.

Participation elsewhere was more mixed, however, with strength in semiconductor and AI-related names contrasting with weakness across several non-semiconductor mega-cap stocks. The consumer discretionary sector (-1.4%) finished at the bottom of the sector standings as Amazon (AMZN 267.28, -4.99, -1.83%) and Tesla (TSLA 327.51, -5.30, -1.59%) moved lower. Large apparel names also faced pressure, while homebuilders and related construction names struggled even as yields eased. The iShares U.S. Home Construction ETF fell 2.3%.

The communication services sector (-0.9%) was another laggard, with Meta Platforms (META 578.85, -20.27, -3.38%) among the weakest "Magnificent Seven" components. Charter Comm (CHTR 150.22, -7.47, -4.74%) also finished sharply lower despite little in the way of company-specific news.

Unlike the previous two sessions, geopolitical developments and oil prices had little influence on today's action. There were few meaningful developments surrounding the U.S.-Iran conflict, and WTI crude oil futures settled just $0.09 higher (+0.1%) at $83.26 per barrel. The energy sector (+0.2%) finished with a modest gain.

Overall, today's relatively uneventful session reflected a market that received some reassurance from the inflation data without a significant shift in the broader outlook. Reduced expectations for a September rate hike and renewed enthusiasm across semiconductor and AI-related stocks provided enough support to keep the S&P 500 and Nasdaq higher, even as mixed participation and weakness across several mega-cap names kept the advance contained.

U.S. Treasuries settled today's session mixed and little changed, surrendering a decent chunk of overnight gains in spite of a CPI report for July that was deemed market-friendly and a solid $42 billion 10-year note auction. The 2-year note yield settled down two basis points to 4.20%, and the 10-year note yield finished unchanged at 4.68%.

• Russell 2000: +22.7% YTD
• S&P Mid Cap 400: +18.0% YTD
• Nasdaq Composite: +14.4% YTD
• S&P 500: +13.2% YTD
• DJIA: +11.9% YTD

Reviewing today's data:

• Total CPI was up 0.1% month-over-month in July (Briefing.com consensus: 0.1%) following a 0.4% decline in June. That left the year-over-year rate at 3.4%, down from 3.5% in June. Core CPI, which excludes food and energy, was up 0.2% month-over-month (Briefing.com consensus: 0.2%) following an unchanged reading for June. On a year-over-year basis, core CPI was up 2.5% versus 2.6% in June.
  
  • The July CPI report, at the least, did not stoke "new" concerns that the Fed will have to raise rates at the September FOMC meeting. That is the key takeaway from the report, and it was embedded in the realization that this report came in as expected.
• The Treasury Department reported a $432.3 billion deficit for July versus a deficit of $291.1 billion for the same period in July 2025. Receipts totaled $334.0 billion, while outlays reached $766.3 billion.
  
  • The key takeaway from the report is that the net interest outlay exceeded the national defense outlay, which is saying something given that the U.S. is at war with Iran.