TLDR
Good macro data beat bad geopolitical headlines.
Equities bounced after a softer-than-expected CPI report. The S&P 500 rose 0.36% and Nasdaq gained 1.11%. The cleanest read is that investors were willing to buy growth again because inflation cooled, Treasury yields fell, and the market reduced the probability of a near-term Fed hike.
But this was not a perfect tape. Oil kept rising because the U.S.-Iran conflict is still active, high-yield spreads widened slightly, and equal-weighted equities lagged. The market is not panicking, but the risk is obvious: June CPI looked good because energy prices fell, while July oil is already moving the other way.
The market is saying: inflation improved, but the inflation risk did not disappear.
Equities
Tech and large caps mostly bounced back from Monday's terrible day. SOXX was up 2.5% compared to Monday's close. Likewise, the Nasdaq and SPY we're both up as well 1.11% and 0.36%, respectively. The equal-weighted S&P 500 was down though, signaling that markets are still on weak footing.
We can see technology, energy, and financials were all up. Financials we're driven by huge profits reported at the bulge bracket banks.
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For informational purposes only — not investment advice.