CPI Data Poised to Spark Market Direction Shift

Good Morning Investors,

Markets paused on Monday ahead of this morning's CPI print. The S&P 500 ($SPY ( ▼ 0.4% )) slipped 0.3%, the Nasdaq ($QQQ ( ▼ 0.46% )) fell 0.3%, and the Dow ($DIA ( ▼ 0.31% )) lost 0.5%. Price action looked like indecision rather than fear, with an early push toward the highs that faded into the close. This fits my base case for a short consolidation into CPI, then a modest reset before a run at new highs into Jackson Hole.

Futures are essentially flat into the release. Dow futures are up about 61 points, roughly 0.1%, while S&P 500 and Nasdaq 100 futures sit just above the flatline. The July CPI lands at 8:30 a.m. ET. Headline is expected at 2.8% year-over-year and core at 3.0%, with a 0.3% monthly core increase that would be the strongest in six months. Tariff effects are increasingly visible in goods categories such as apparel, footwear, furniture and bedding. The market still prices a September cut with probability near 87%. A softer print could unlock a breakout. A hotter one likely forces a brief shakeout while attention turns to Jackson Hole.

The United States and China extended their tariff truce by 90 days, pushing the next decision point to November and taking near-term escalation risk down a notch. At the same time, the Nvidia ($NVDA ( ▼ 0.24% )) AMD ($AMD ( ▼ 0.9% )) revenue-share arrangement with Washington (15% to Treasury) keeps a channel open to Chinese AI demand while creating a hybrid approach that reduces binary geopolitical risk. On the consumer side, Ford outlined a simplified, software-defined EV platform targeting a 2027 launch at around $30,000, an affordability swing that matters if the cost curve continues to bend lower.

Pfizer ($PFE ( ▲ 1.42% )) and Merck ($MRK ( ▲ 1.68% )) reported encouraging trial results for a bladder cancer regimen, with event-free and overall survival benefits versus surgery alone. On Holding ($ONON ( ▼ 1.46% )) holding lifted guidance as brand momentum pushed U.S. market share gains. Smithfield ($SFD ( ▲ 0.47% )) raised its outlook on resilient at-home protein demand as consumers continue cooking more meals at home. Spirit Airlines ($SAVEQ ( ▲ 0.43% )) warned on going-concern risk as domestic pricing and demand remain soft, highlighting the bifurcation in travel markets.

Ethereum ($ETH.X ( ▲ 0.94% )) has broken to nine-month highs, with the prior all-time high at $4,842 still providing runway. I expect a push toward $5,000 before a consolidation, supported by stablecoin settlement growth and improving network fundamentals. Bitcoin ($BTC.X ( ▼ 0.71% )) dominance is easing and total crypto market cap is in price discovery, which creates opportunity for selective altcoins. Solana ($SOL.X ( ▼ 2.53% )) remains on my list given its infrastructure positioning.

Cyclical softness and a mild bid in defensives suggest sentiment is finally catching up with price momentum. This is a development that often argues for a brief reset rather than a trend change. The broader technical backdrop remains constructive with key support levels intact. Tesla ($TSLA ( ▼ 1.17% )) is a tactical watch: a decisive move through and hold above $338 could invite an acceleration higher, given the stock's history of outsized moves when breaking from consolidation patterns.

I continue to favor Alphabet ($GOOG ( ▲ 0.22% )), which trades at 18x forward earnings despite underappreciation in AI and credible quantum computing positioning. The search moat remains intact while cloud acceleration provides multiple expansion opportunity. Amazon ($AMZN ( ▼ 0.83% )) also sits at the core of my AI exposure, with its cloud-data-application flywheel creating compounding monetization as enterprise adoption scales.

My roadmap remains straightforward. Markets have chopped rather than cracked into CPI, which is typically what you want before a data catalyst. I still could see a reset on or just after the print, then a push to fresh highs into Jackson Hole. Under the surface, leadership belongs to cash-generative operators that monetize AI today and protect pricing across cycles. That's why I continue to back Alphabet, which remains undervalued in AI with credible quantum upside, and Amazon, which benefits from the cloud-data flywheel. Technically, Tesla is coiled with $338 as the pivot for a potential breakout. In crypto, I like Ethereum for a run toward $5,000 before a pause, with stablecoin momentum as the backbone, and I see room for altcoins like Solana as Bitcoin dominance eases. The aim is to hold platforms that turn policy noise into durable revenue and let a short reset refresh the trend rather than fight it.