Stocks Reach New Highs as Cooling Inflation Boosts Fed Optimism 

The stock market closed generally higher last week, despite a minor setback last Friday. Market momentum was driven by cooling inflation data, solid Q2 corporate earnings reports and strengthening opinions that the Federal Reserve may posture a more dovish approach to interest rates in the near term. The S&P 500 reached an all-time record high last Thursday, climbing to 7,816. Nine of the 11 market sectors posted gains, with the exception of Consumer Discretionary and Communication Services, which closed lower. Treasury yields eased somewhat on the greater likelihood that the Fed would not hike rates anytime soon. Crude oil prices rose above $82 per barrel as the U.S. increased economic pressure on Iran to reopen the Strait of Hormuz. 

Consumer Price Growth Continues to Moderate in July 

The Consumer Price Index (CPI) increased 0.1% in July after falling 0.4% in June, according to the Bureau of Labor Statistics. Prices for shelter rose 0.1% in July, accounting for roughly two-thirds of the overall monthly increase. Prices for food also increased 0.1% last month, as prices for food away from home rose 0.3%. In contrast, energy prices declined 1.5% in July. Prices less food and energy rose 0.2% in July after being unchanged in June. Last month, prices increased for medical care, airline fares, communication, education and recreation. Conversely, prices fell for medical care commodities, health insurance and motor vehicle insurance. The CPI rose 3.4% for the 12 months ended in July after rising 3.5% for the 12 months ended in June. Prices less food and energy rose 2.5% over the last 12 months following a 2.6% increase over the 12 months ended in June. Energy prices increased 14.7% since July 2025. Food prices increased 3.0% over the same 12-month period. 

Eye on the Week Ahead 

This week is light on market-moving economic reports. However, investors may pay particular attention to the July data on import and export prices (a measure of inflation) and the latest report on industrial production.