NASDAQ rebounds as cooling US inflation weighs on dollar

Analysts had anticipated a larger 3.8 per cent CPI uptick, according to economists surveyed by Dow Jones Newswires and The Wall Street Journal.

“This was the largest moderation in US price growth for six years and it drastically reduces the chance of a rate cut at this month’s (Federal Reserve’s monetary policy committee) meeting,” said Kathleen Brooks, research director at XTB trading platform.

But newly installed Fed Chair Kevin Warsh indicated Tuesday that it was still too early to celebrate.

“There might be some that look at this morning’s data and say, ‘Oh, mission accomplished! Everything is swell,'” Warsh said at a House Financial Services Committee hearing. “That is not my view.”

He told lawmakers that Federal Reserve officials have “no tolerance” for stubbornly high prices and vowed to rid the United States of a years-long “inflation surge.”

But the dollar fell against the euro and other major currencies as futures markets showed fewer traders now expect a rate hike at the Fed’s July 29 meeting.

Earlier, European bourses avoided major moves, while Asian stocks mostly climbed after tech firms enjoyed some reprieve from the latest bout of selling.

Among individual companies, IBM slumped more than 25 per cent after the US tech giant released disappointing preliminary second-quarter results, blaming a shift in spending by customers due to expected higher prices for memory chips and other AI-related infrastructure.

“We did not adapt and move quickly enough,” IBM CEO Arvind Krishna said in a letter to investors.