September S&P 500 E-Mini futures (ESU25) are trending up +0.24% this morning, extending yesterday’s gains as growing expectations for Federal Reserve interest rate cuts fueled risk-on sentiment.

U.S. inflation data for July showed a modest increase in goods prices, reinforcing expectations that the Fed will resume rate cuts next month and move more aggressively to protect a labor market showing signs of strain. The data was accompanied by remarks from U.S. Treasury Secretary Scott Bessent, who suggested that the U.S. central bank should be open to a 50 basis-point rate cut in September. Optimism over a softer rate stance is further supported by easing global trade tensions and a much stronger-than-expected second-quarter earnings season in the U.S.

In yesterday’s trading session, Wall Street’s three main equity benchmarks closed sharply higher. The Magnificent Seven stocks advanced, with Meta Platforms (META) rising over +3% and Microsoft (MSFT) gaining more than +1%. Also, chip stocks gained ground, with NXP Semiconductors N.V. (NXPI) climbing over +7% to lead gainers in the Nasdaq 100 and ON Semiconductor (ON) rising more than +6%. In addition, airline stocks surged after oil prices declined, with United Airlines (UAL) jumping over +10% to lead gainers in the S&P 500. On the bearish side, Cardinal Health (CAH) slumped more than -7% and was the top percentage loser on the S&P 500 after the drug distributor posted weaker-than-expected FQ4 revenue and announced it had agreed to acquire Solaris Health for $1.9 billion in cash.

The U.S. Bureau of Labor Statistics report released on Tuesday showed that consumer prices rose +0.2% m/m in July, in line with expectations. On an annual basis, headline inflation rose +2.7% in July, the same as the previous month and slightly weaker than expectations of +2.8%. Also, the core CPI, which excludes volatile food and fuel prices, rose +0.3% m/m and +3.1% y/y in July, compared to expectations of +0.3% m/m and +3.0% y/y.

“Inflation is on the rise, but it didn’t increase as much as some people feared. In the short term, markets will likely embrace these numbers because they should allow the Fed to focus on labor-market weakness and keep a September rate cut on the table,” said Ellen Zentner at Morgan Stanley Wealth Management.

Richmond Fed President Tom Barkin said on Tuesday that uncertainty about the U.S. economy’s trajectory is easing, but it remains unclear whether the central bank should place greater focus on curbing inflation or supporting the labor market. “We may well see pressure on inflation, and we may also see pressure on unemployment, but the balance between the two is still unclear. As the visibility continues to improve, we are well-positioned to adjust our policy stance as needed,” Barkin said. At the same time, Kansas City Fed President Jeff Schmid said he supports holding interest rates steady for now to prevent strong economic activity from adding to inflation pressures. “With the economy still showing momentum, growing business optimism, and inflation still stuck above our objective, retaining a modestly restrictive monetary policy stance remains appropriate for the time being,” Schmid said. He added that he is prepared to shift his stance if demand growth begins “weakening significantly.”

Meanwhile, U.S. rate futures have priced in a 96.2% chance of a 25 basis point rate cut and a 3.8% chance of no rate change at the conclusion of the Fed’s September meeting.

Today, investors will hear perspectives from Richmond Fed President Tom Barkin, Chicago Fed President Austan Goolsbee, and Atlanta Fed President Raphael Bostic.

On the earnings front, network infrastructure provider Cisco Systems (CSCO) is set to report its FQ4 earnings results today.

On the economic data front, investors will focus on U.S. Crude Oil Inventories data, which is set to be released later in the day. Economists expect this figure to be -0.900M, compared to last week’s value of -3.029M.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.256%, down -1.21%.

The Euro Stoxx 50 Index is up +0.73% this morning amid risk-on sentiment, driven by growing expectations of Federal Reserve interest rate cuts. Defense and technology stocks led the gains on Wednesday. Final data from the Federal Statistical Office released on Wednesday confirmed that Germany’s annual inflation rate held at 2.0% in July. Separately, final data from the National Statistics Institute confirmed that Spain’s annual inflation rate rose for the second month to a 5-month high of 2.7% in July. Meanwhile, European leaders and Ukrainian President Volodymyr Zelenskyy are set to speak with U.S. President Donald Trump later today ahead of his summit with Russian President Vladimir Putin. In corporate news, Tui AG (TUI1.D.DX) gained over +4% after Europe’s largest tour operator reported better-than-expected quarterly results and raised its full-year profit guidance.

Germany’s CPI and Spain’s CPI data were released today.

The German July CPI rose +0.3% m/m and +2.0% y/y, in line with expectations.

The Spanish July CPI fell -0.1% m/m and rose +2.7% y/y, in line with expectations.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.48%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +1.30%.

China’s Shanghai Composite Index closed higher and hit a more than 3-1/2-year high today as the extension of the tariff truce between the U.S. and China continued to boost sentiment. U.S. Treasury Secretary Scott Bessent said on Tuesday that U.S. trade officials will meet again with their Chinese counterparts within the next two to three months to discuss the future of the economic relationship between the two nations. Also, expectations for a Fed interest rate cut next month lifted global risk appetite, and “emerging and developed equity markets resonated,” according to analysts at Guoyuan Securities. Meanwhile, China announced it will provide interest subsidies for businesses in eight consumer service sectors, as well as for individual consumers, to bolster services consumption. Eligible businesses and consumers can receive an annual interest subsidy of one percentage point on loans. “It will support domestic consumption to become a major driving force of the national economy,” China’s Vice Finance Minister Liao Min said on Wednesday. In other news, trade tensions between China and Canada intensified after Chinese authorities announced plans to impose a steep tariff of around 76% on canola shipments. In corporate news, WH Group climbed over +6% in Hong Kong after the pork processor posted a 10.4% increase in first-half operating profit. Investor focus this week is on a slew of China’s official data, including industrial production, retail sales, fixed asset investment, and unemployment figures, which will provide the most comprehensive view yet of the country’s economic momentum in July.

Japan’s Nikkei 225 Stock Index closed higher and reached a new all-time high today, tracking Wall Street’s overnight rally. Electronics and machinery stocks led the gains on Wednesday. Data released on Wednesday showed that Japan’s annual wholesale inflation eased for the fourth consecutive month in July, reinforcing the Bank of Japan’s view that upward price pressures from raw material costs will fade. Still, wholesale prices for food and agricultural products continued to climb, signaling broadening price pressure that will likely sustain market expectations for a BOJ interest rate hike. Separately, a Reuters Tankan poll showed that Japanese manufacturers became more upbeat about business conditions in August following a trade deal between Tokyo and Washington, though they remained cautious about the outlook due to potential impacts from U.S. tariffs. Meanwhile, Japanese government bonds fell on Wednesday after a five-year bond auction drew the weakest demand in over five years, sparking a wave of selling by investors. In other news, Japan’s Ministry of Economy, Trade and Industry said on Wednesday that the country has initiated an anti-dumping probe into hot-dip galvanized steel from China and South Korea. In corporate news, Yokohama Rubber climbed over +8% after the tyre maker posted strong first-half results and raised its full-year earnings guidance. Investors are awaiting Japan’s preliminary second-quarter GDP data, scheduled for release on Friday, following the BOJ’s reiteration that growth is expected to moderate. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -0.65% to 24.50.

The Japanese July PPI rose +0.2% m/m and +2.6% y/y, compared to expectations of +0.2% m/m and +2.5% y/y.

Pre-Market U.S. Stock Movers

Intapp (INTA) soared over +29% in pre-market trading after the AI cloud company posted upbeat FQ4 results and announced a $150 million stock buyback.

Sapiens International (SPNS) jumped more than +44% in pre-market trading after the company agreed to be acquired by Advent for $2.5 billion.

Palo Alto Networks (PANW) rose over +1% in pre-market trading after Deutsche Bank upgraded the stock to Buy from Hold with a price target of $220.

CoreWeave (CRWV) slumped more than -9% in pre-market trading after the AI cloud vendor reported a wider-than-expected Q2 loss.

CAVA Group (CAVA) plunged over -24% in pre-market trading after reporting much weaker-than-expected Q2 same-restaurant sales growth.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - August 13th

Cisco (CSCO), Elbit Systems (ESLT), Coherent (COHR), JBS NV (JBS), Performance Food Group Co (PFGC), Stantec (STN), StandardAero (SARO), Brinker (EAT), Loar Holdings LLC (LOAR), GlobalE Online (GLBE), Equinox Gold (EQX), HudBay Minerals (HBM), Ultrapar Participacoes (UGP), Dlocal (DLO), ReNew Energy Global (RNW), Alvotech (ALVO), PagSeguro Digital (PAGS), Marex (MRX), Fidelis Insurance Holdings (FIHL), Nayax (NYAX), Endeavour Silver (EXK), Sapiens (SPNS), ARS Pharmaceuticals (SPRY), Arcos Dorados (ARCO), Madison Square Garden Entertainment (MSGE), Stratasys Ltd (SSYS), Ibotta (IBTA), Borr Drilling (BORR), Avino Silver Gold (ASM), Kimball Electronics (KE), North American Construction (NOA), SBC Medical Holdings (SBC), Kamada (KMDA), Galiano Gold (GAU), Oncology Institute (TOI), Euroseas (ESEA), Innoviz Technologies (INVZ), FrontView REIT (FVR), Global Water (GWRS), Sanara Medtech (SMTI), Codexis (CDXS), Brainsway (BWAY), European Wax Center (EWCZ), Allogene Therapeutics (ALLO), Radcom (RDCM), B. Riley Financial (RILY), Accuray (ARAY), Ucloudlink (UCL), Epsilon Energy (EPSN), Gauzy (GAUZ), China Automotive (CAAS), Red Robin Gourmet Burgers (RRGB).