Dow, S&P 500, Nasdaq futures slip as Fed rate cut bets wane after inflation pickup

US stock futures slipped Tuesday evening as Wall Street braced for another inflation checkup after Tuesday's consumer price reading spurred traders to pare bets on Fed rate cuts in the coming months.

Dow Jones Industrial Average futures (YM=F) fell 0.3% after the blue-chip index lost over 400 points in Tuesday's session. Futures tied to the S&P 500 (ES=F) were also down 0.3%. Those on the Nasdaq (NQ=F) also lost 0.3% after the tech-heavy index closed at another record high Tuesday on the back of a surge from Nvidia (NVDA).

Markets are reassessing in the wake of the CPI report showing inflation accelerated in June, rising at its fastest year-over-year clip since February, with signs of tariff-driven inflation starting to show up in the data.

That has led to more speculation that the Federal Reserve will stand pat not just this month — an outcome that seems virtually guaranteed at this point — but also in September, even as President Trump pushes furiously for rate cuts.

According to the CME Group, bets on a September cut are near 50-50, with bets on a hold surging over the last month. The moves weighed on Treasurys, with the 10-year yield (^TNX) rising to near 4.5% and the 30-year yield (^TYX) pushing past 5% for the first time since early June.

Markets will get another inflation pulse check on Wednesday with the release of the Producer Price Index, which measures wholesale inflation before prices reach consumers. Like consumer prices, the PPI is expected to show a pickup in inflation last month.

As the market attempts to digest the early effects of Trump's tariffs, he has plowed ahead with plans to impose increased duties next month on key trading partners, including the European Union, Canada, and Mexico. Trump announced Tuesday that the US had reached a deal with Indonesia as it continues talks.

Meanwhile, earnings season kicked off in earnest Tuesday with big banks reporting mixed results. Goldman Sachs (GS) and Morgan Stanley (MS) are up Wednesday, along with Johnson & Johnson (JNJ) and United Airlines (UAL).

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