Market Mood Sours as Inflation Surprises Again

Naranj Capital Research Desk
July 16, 2025

U.S. stock markets were under pressure on Tuesday after new inflation data came in higher than expected. This has made investors rethink how soon the Federal Reserve might cut interest rates.

What Happened?

The Consumer Price Index (CPI) recorded its biggest monthly rise in 5 months.
Core inflation (which excludes food and energy) jumped by 2.9% compared to last year — more than the Fed's 2% target.

What It Means

Investors had expected the Fed to cut interest rates multiple times in 2025.
After the inflation report, they now think the Fed will cut less than expected.
The chances of a rate cut in September also dropped sharply.

Market Impact

Bond yields went up — the 10-year U.S. government bond yield rose to 4.49%, making borrowing more expensive.
Stock futures fell (Dow, S&P 500, Nasdaq), as higher yields tend to hurt company profits and stock prices.

S&P 500 and Dow Struggle at Resistance

Both the S&P 500 and Dow Jones faced resistance near all-time highs.
This rejection suggests potential for further short-term pullback, especially if macro pressures like inflation and rate uncertainty persist.

Near-Term Outlook

With inflation running hotter than expected, hopes for early Fed rate cuts have cooled. Traders and investors should remain cautious, manage risk actively, and prepare for continued volatility in the coming weeks.