Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) opened Tuesday’s trading session in the green. However, the gains were short-lived, as SPY closed in negative territory while QQQ was able to hold on to minimal gains.
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Before the market open, the U.S. Bureau of Labor Statistics released inflation data for June. The Consumer Price Index (CPI) showed a 0.3% month-over-month increase and a 2.7% year-over-year increase. While both figures matched the consensus estimate, YoY inflation ticked higher from 2.4% in May and 2.3% in April. That signals that President Trump’s tariffs could be trickling into the economy in the form of higher prices.
Afterwards, the odds of a July rate cut dropped to 2.6% compared to 6.2% yesterday and 23.0% a month ago. One of the Fed’s roles is to tackle inflation and keep it around 2%. The central bank tends to raise rates to combat inflation and lowers them when inflation is under control.
Trump maintained his stance that the Fed and Fed Chair Jerome Powell should lower interest rates. “Fed should cut Rates by 3 Points. Very Low Inflation. One Trillion Dollars a year would be saved!!!” he said in a Truth Social post.
Trump has also begun the formal process of searching for a Fed Chair replacement, according to Treasury Secretary Scott Bessent. “There’s a formal process that’s already starting,” said Bessent in a Bloomberg interview. The process is “President Trump’s decision, and it’ll move at his speed.”
On the trade front, the U.S. has secured a trade deal with Indonesia. The U.S. will place a 19% tariff on Indonesian goods, down from the 32% rate that would have been effective August 1. In return, Indonesia will place a 0% tariff on U.S. goods and purchase $15 billion worth of energy, $4.5 billion of agricultural products, and 50 Boeing (BA) jets.
Meanwhile, the House voted 196-223 against a procedural motion that would allow the consideration of several cryptocurrency bills, including the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. 13 Republicans voted “no” with Democrats, although another vote will be held later today. “Digital Assets are the FUTURE, and we are leading by a lot!” said Trump in a Truth Social post before the vote.
The S&P 500 (SPX) closed with a 0.40% loss while the Nasdaq 100 (NDX) edged higher by 0.13%.
