Wall Street Set for Optimistic Open Amid Inflation and Trade Developments

Wall Street's main indexes are poised for a positive open, bolstered by inflation data aligning with expectations and a U.S.-China tariff truce. The Consumer Price Index rose 0.2% monthly and 2.7% annually in July. Optimism is tempered by higher underlying inflation and uncertainties in economic data.

Wall Street's major indexes are positioned for a promising opening session on Tuesday, driven by inflation data that largely met predictions for July, potentially setting the stage for the Federal Reserve to reduce interest rates come September. The Consumer Price Index noted a 0.2% rise monthly and a 2.7% increase annually, slightly under economists' 2.8% expectation. Despite positive indicators, reports of a more-than-expected 3.1% rise in underlying inflation tempered the optimism.

The bond market reflected these developments as yields on short-term Treasury bonds decreased post-data release, while futures markets signaled an 88.8% probability of a 25 basis points rate cut in September. "Tariff-induced inflation remains a gradual process," commented Brian Jacobsen, economist at Annex Wealth Management, hinting at further incremental impacts on consumer prices. Concerns over economic data reliability hover, highlighted by President Trump's recent dismissal of the Bureau of Labor Statistics chief following revisions in payroll data.

An extension of the tariff ceasefire with China until November 10 further soothed global investment sentiments. The move prevents looming additional tariffs on bilateral goods. This coincides with U.S. stocks rallying to highs driven by robust earnings from tech giants, and anticipated interest rate reductions. Investor attention remains fixed on appointments to BLS and potential Federal Reserve leadership changes. Among stocks, Intel and Palo Alto Networks saw gains amidst endorsements and new ratings, while acquisition rumors propelled Hanesbrands' stock by 37%.

(With inputs from agencies.)