Stock Market Today: S&P 500, Nasdaq Futures Rise Ahead Of August CPI Print—Kroger, RH, Adobe Earnings In Focus
News Summary
U.S. stock futures rose on Thursday, following a mixed close on Wednesday. Despite economists forecasting August's Consumer Price Index (CPI) to climb to 2.9% year-over-year—the highest annual pace since January 2025—market sentiment was boosted by wholesale price data, as the Producer Price Index (PPI) unexpectedly slipped 0.1% in August, contrary to expectations for a 0.3% increase. Wholesale inflation also sharply slowed annually from 3.3% to 2.6%. Regarding benchmark yields, the 10-year Treasury bond yielded 4.05% and the two-year bond was at 3.55%. The CME Group's FedWatch tool indicates markets are pricing a 100% likelihood of a Federal Reserve interest rate cut on September 17. Analysts at Goldman Sachs and Bank of America project a 2.9% annual inflation rate for August, attributing the rise to used-car prices, car insurance, airline tickets, and goods in tariff-affected sectors following President Trump's tariffs enacted in April. LPL Research suggests that $7.4 trillion in money market funds could be redeployed into equities as the Fed begins an easing cycle, potentially fueling the bull market, supported by the AI investment cycle and steady economic growth. In corporate news, Kroger, RH, and Adobe were in focus ahead of their earnings reports. Oracle Corp. continued its rally after announcing a record backlog of AI-related orders. In commodities, crude oil futures were trading lower, gold spot prices fell, and the U.S. Dollar Index was higher.
Background
This news article was published on September 11, 2025, a critical period when global financial markets are closely monitoring inflation data and central bank monetary policy shifts. The U.S. economic backdrop is complex: while markets anticipate the Federal Reserve is on the verge of commencing an interest rate cutting cycle, inflation data (particularly following President Trump's tariffs enacted in April 2025) indicates persistent upward pressure. Investors are currently weighing economic growth, inflation, and corporate earnings prospects. The Fed's interest rate decisions have profound implications for equity valuations and capital flows, especially given the substantial cash accumulated in money market funds, whose reallocation could act as a significant market catalyst. Furthermore, the strong performance of certain sectors, such as AI-linked technology stocks, alongside specific corporate earnings reports, continues to shape the prevailing investment narrative.
In-Depth AI Insights
What deep market psychology does the current market's reaction (or lack thereof) to rising inflation forecasts reveal, and how might this influence the Fed's policy trajectory? - Despite August CPI projections hitting 2.9% (a high since January) and institutions like Goldman Sachs highlighting tariff impacts, stock futures are rising. This suggests the market views inflation as a 'manageable' short-term risk or, more likely, is prioritizing the prospect of rate cuts it might trigger. - This 'rate cut first' mentality could stem from concerns about slowing economic growth or a belief that current inflation is transitory, driven by specific factors (tariffs, supply chain adjustments) rather than structural overheating. The market may be betting the Fed will prioritize supporting economic growth and equities, even if it means tolerating slightly higher inflation in the short term. - If market expectations for rate cuts become too aggressive, the Fed might face pressure to clarify its inflation mandate and policy independence. Overly dovish market pricing could paradoxically limit the Fed's room to maneuver, potentially leading to credibility challenges if inflation proves more sticky. What are the implications of the $7.4 trillion in money market fund 'dry powder' for asset allocation in the coming months, and are there underestimated risks? - This massive cash reserve represents significant potential buying power. Once the Fed cuts rates and money market funds become less attractive, it could trigger a substantial inflow into the equity market, particularly into high-growth and AI-related sectors, further inflating valuations. - However, this influx could also create a 'momentum chasing' dynamic, increasing the risk of market bubbles, especially if economic fundamentals do not fully support current high valuations. Should unexpected weakness emerge in economic data (e.g., employment, consumption) or geopolitical risks escalate, this capital could swiftly withdraw, exacerbating market volatility. - Furthermore, the flow into equities might not be evenly distributed, potentially concentrating in a few high-profile stocks. This could exacerbate market breadth issues, where a few giants support index gains while most stocks underperform, which is not a sign of a healthy bull market. Given that the Trump administration's tariff policies are explicitly cited as a driver of rising inflation, how does this impact expectations for future macroeconomic policy and market volatility? - The explicit mention of tariffs as an inflationary factor reinforces the direct link between trade policy and domestic price stability. This implies that during President Trump's term, investors need to pay closer attention to potential shifts in trade policy, as they can directly influence corporate costs and consumer prices. - Such policy uncertainty could lead businesses to be more cautious in their supply chain planning and pricing strategies, affecting investment and production decisions. The continued presence or escalation of tariffs could exert persistent cost pressure on import-dependent industries, eroding profit margins. - Moreover, if inflation remains stubbornly high, the Fed's room for rate cuts could be constrained, or the pace of easing might be slower than market expectations. This could lead to a reassessment of the 'soft landing' optimism in the short term and potentially increase volatility in asset prices.