The number landed at 8:30 this morning. June CPI: 3.5%. The Street expected 3.8%. Monthly: down 0.4% — the biggest single-month decline in more than six years. Core: 2.6%, below the 2.9% consensus. Gasoline fell 9.7% in June. The oil crash from $95 to $68 that happened under the ceasefire showed up in the data — exactly the way the market hoped it would. Warsh took the microphone at 10 AM and told Congress the "inflation surge of the last five years will be a thing of the past." Hike odds fell from 35% to 15% in an hour. Then Trump dropped the 20% Strait toll he announced yesterday, replacing it with investment deals from Gulf states. Goldman printed $21 a share on record trading. JPMorgan posted its highest profit in history. The S&P gained 0.38%. The Nasdaq rose 0.9%. And the Dow — the Dow gained nine points. Nine. Because IBM fell 25% and wiped out the rest of the tape. The biggest day of Q3 delivered everything the market wanted. One stock kept it from showing.
The Close
The S&P gained 0.38% to 7,544. The Nasdaq rose 0.9% to 26,107. Chips bounced — the semiconductor ETF gained 2.5% after Monday's rout. Goldman Sachs surged 7.4% on a blowout quarter. And the Dow — which should have flown on CPI, Warsh, and Goldman — gained nine points. IBM fell 25% and by itself subtracted 425 points from the 30-stock index. Without IBM the Dow was up 400 points. With it, the Dow gained a dime.
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| CPI (annual) | 3.5% (est 3.8%) | −0.4% m/m | ||
| Goldman Sachs | EPS $20.98 | +7.4% | ||
| IBM | Q2 warning | −25% | ||
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| Energy | +1.5% | |||
| Info. Technology | +1.2% | |||
| Comm. Services | +0.5% | |||
| Materials | +0.3% | |||
| Consumer Staples | +0.3% | |||
| Financials | +0.3% | |||
| Utilities | +0.2% | |||
| Real Estate | +0.1% | |||
| Consumer Disc. | −0.2% | |||
| Industrials | −0.4% | |||
| Health Care | −0.8% | |||
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CPI was the star. Headline inflation fell to 3.5% from 4.2% in May — the biggest one-month drop since December 2019. The monthly reading came in at −0.4%, double the expected −0.2% decline. Gasoline fell 9.7% in June, reflecting the oil crash from $95 to $68 that happened during the ceasefire. Core CPI — the number that strips out food and energy and tells you what the Fed watches closest — came in at 2.6% annually, below the 2.9% forecast. Monthly core was flat. Zero. Not declining, but not rising either. Jamie Cox at Harris Financial Group put it simply: "If you were looking for runaway inflation in this report, you didn't get it."
Goldman Sachs posted $20.98 a share, beating the $14.48 consensus by 45%. Revenue hit $20.34 billion against the $16.13 billion estimate. The equities desk had a historic quarter — war volatility is a trading desk's best friend. JPMorgan's equities unit surged 86%. Revenue hit a record in every line of business. EPS of $6.14 beat the $5.59 estimate. Bank of America gained 1.3%. Citigroup dropped 5.8%. Wells Fargo fell 3.3%. The spread between the winners and losers told the story: the banks that trade made fortunes. The banks that lend are watching costs rise.
IBM crashed 25% after warning that enterprise clients are shifting spending from software and mainframes to AI hardware. CEO Arvind Krishna said demand for servers, storage, and memory is eating into traditional budgets. That's the same story Micron and SK Hynix are telling from the other side — AI hardware is booming, and the money is coming from somewhere. IBM is the somewhere.
Then Trump reversed himself. The 20% Strait cargo fee he announced yesterday was replaced with "Trade and Investment Deals that the various Gulf States will be making into the United States." Oil pulled back from its intraday high of $85.77 but still closed at $84.95 on Brent, up 2%. The blockade on Iranian ships remains. The toll on everyone else's ships doesn't.
What The Market Is Pricing In
June CPI captured the ceasefire — the two weeks when oil fell from $95 to $68 and gasoline dropped 9.7%. That price drop flowed through the whole economy. Headline inflation fell from 4.2% to 3.5% in one month. Core held at 2.6%. And when Warsh took the microphone at 10 AM and told Congress the "inflation surge of the last five years will be a thing of the past," the market heard something it hasn't heard in months: a Fed chair who isn't threatening to raise rates.
Hike odds fell from 35% to 15% in an hour. A month ago the market was pricing two hikes by year-end. Today it's pricing one, maybe, and even that feels like a stretch if the data keeps coming in like this. The CPI didn't just beat expectations. It beat them on every line. Headline, core, monthly, annual — all below consensus. That's not a rounding error. That's a trend.
Here's the catch. The June number captures the oil crash. But oil isn't at $68 anymore. It's at $85. The ceasefire collapsed. The blockade is back. The Strait has nine ships a day instead of forty-nine. If Brent stays above $80 through July, the July CPI won't look like the June CPI. The inflation drop that Warsh celebrated this morning may be the best print of the year — a one-month window of falling prices sandwiched between $95 oil before the deal and $85 oil after the deal broke.
June CPI fell to 3.5% — the biggest monthly decline in six years — and the market is telling you that the ceasefire bought one clean inflation print, but with Brent back above $84 and the blockade reimposed, the window may already be closing. Hike odds fell from 35% to 15%. Warsh was dovish. Goldman printed record earnings. But if the July data shows energy costs rising again, the inflation story snaps back and the one-hike-by-December trade comes alive. This is the tension: the best CPI of the year arrived the same week oil surged 10%.
In early 2015, oil crashed from $100 to $45 and the first CPI to capture the full collapse showed headline inflation at 0.0%. The market rallied for six months. The Fed held all year. By September the S&P was at new highs. The difference: in 2015, oil stayed low. In 2026, oil bounced back to $85 within three weeks of the ceasefire collapsing. If the blockade resolves and oil falls back to $70, today's CPI is the start of a disinflationary run. If it doesn't, today's 3.5% is the low-water mark — and the market will have to reprice everything that rallied this morning.
What's Next
Three things I'm watching the rest of this week:
01 — June PPI Wednesday July 15 at 8:30 AM
The producer price index tells you what businesses are paying before the costs reach consumers. If PPI confirms the CPI story — falling input costs, easing supply-chain pressure — the "inflation peaked" trade firms up. If PPI shows rising costs (especially energy and transportation) that haven't reached the consumer yet, the CPI relief is temporary and the July print gets worse. PPI feeds directly into the core PCE calculation, which is the Fed's preferred inflation measure. Same day: Fed Beige Book, ASML earnings, Johnson & Johnson, and Morgan Stanley.
02 — Does Brent stay above $80?
Trump dropped the 20% toll. That eased the market. But the blockade on Iranian ships is still active. Strikes continue. The Strait has nine commercial transits a day. If Brent falls back below $80 by Friday — on the toll reversal and eventual de-escalation — the July CPI math improves and today's rally has legs. If Brent stays above $84 — because the blockade physically restricts supply regardless of the toll — the July inflation print will reverse the June gains and Warsh's "thing of the past" comment ages badly. Oil is the swing variable for everything.
03 — TSMC and Netflix Thursday July 16
Taiwan Semiconductor reports Thursday. TSMC's June revenue surged 68% from a year ago. If the guidance confirms that AI chip demand is accelerating — even as enterprise clients like IBM shift spending away from software — the hardware boom enters its next phase and the chip correction is over. Netflix also reports Thursday. Analysts expect advertising revenue growth and subscriber resilience. If both deliver, the Nasdaq extends its lead and the tech story survives the summer.
The best CPI print of the year landed on a day the Strait was half-shut and Brent crossed $85. June captured the ceasefire. July won't. The question for the rest of the summer is whether Warsh's "thing of the past" holds — or whether it becomes the thing that came back. PPI tomorrow. Oil every day. The data will decide.
That's it for today. See you tomorrow after the close.
