Cleveland Fed President Beth Hammack — one of the three officials who voted to hike on July 29 — said it "may take more than one rate hike to rein in inflation." The S&P fell 0.32% to 7,728. The Nasdaq dropped 0.60%. The Dow lost 184 points. Communication services fell more than 2% as Alphabet dropped 3.8% on its AI reorganization. Meanwhile Nvidia announced partnerships with Blackstone, Apollo, and KKR to line up more than $500 billion in data center financing. Apollo surged 6%. The AI spending is going bigger. But the market wants tomorrow's CPI first. July's number captures the weeks when oil was between $90 and $100. Tomorrow at 8:30 a.m. is the verdict.
Second straight decline, defensive positioning. The S&P lost 0.32% to close at 7,728.20 — now about 30 points off Friday's record. The Nasdaq fell 0.60% to 26,445.45. The Dow shed 184 points to 53,791.85. Communication services was the worst-performing S&P sector, down more than 2% as Alphabet dragged the entire group. Energy and industrials led modestly on rising oil. The Russell 2000 gained 0.45% — small caps rallied while large caps sold, with more than 1,250 Russell holdings advancing. The rotation continues: the little companies are rising while the big ones de-risk ahead of CPI.
| The Numbers I Circled | At the close, August 11 · Day change |
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| S&P 500 | 7,728.20 | −0.32% |
| Nasdaq | 26,445 | −0.60% |
| Russell | 3,025 | +0.45% |
| S&P 500 Sectors | Day change |
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| Industrials | | +0.5% |
| Energy | | +0.5% |
| Utilities | | +0.4% |
| Financials | | +0.3% |
| Materials | | +0.2% |
| Consumer Disc. | | 0.0% |
| Health Care | | −0.3% |
| Info. Technology | | −0.4% |
| Consumer Staples | | −0.4% |
| Real Estate | | −0.4% |
| Comm. Services | | −2.0% |
| | Notable Gainers | Day change |
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Alphabet fell 3.8% — its fourth losing session in five — after Google announced a reshuffle of its AI divisions last week. The market read the reorganization as an admission that the AI product strategy wasn't working as structured. AppLovin lost 6% after Bank of America downgraded the stock to neutral and trimmed its price target.
The Nvidia story was the counterweight. The chipmaker announced partnerships with Blackstone, Apollo, KKR, and three other asset managers to arrange more than $500 billion in financing for hyperscalers and frontier AI labs to build data centers. The number — half a trillion — is the largest AI-infrastructure commitment ever announced. Blackstone rose 4%. Apollo and KKR each surged 6%. Nvidia itself closed marginally lower, because the market already prices Nvidia as the AI winner. The partners — the companies that will finance the spending — were the surprise.
Hammack's statement was the warning shot. She was one of three Fed officials who voted to hike at the July 29 meeting. Monday she went further: "It may take more than one rate hike to rein in inflation." That's not a vote for a hold. That's a vote for a campaign. If CPI comes in hot tomorrow, Hammack's statement becomes the preview — not one hike, but two or three, starting September.
What The Market Is Pricing In
When traders sell for two days ahead of a major data print, they're not making a judgment about the economy. They're buying insurance. If CPI comes in hot — above 4% — the market drops 2% to 3% on the number and anyone who held through is fully exposed. If CPI comes in cool — below 3.8% — the market rallies and the sellers buy back at a slightly higher price. The cost of selling early is a few points of missed upside. The cost of holding through a hot print is 2% of portfolio value. The math says sell first, ask questions later. On Wall Street they call it de-risking ahead of the print.
Two days of selling took the S&P from a record to 30 points below it. That's a 0.4% pullback — barely a scratch. It tells you the market isn't bearish. It's cautious. The positioning is: slightly short, ready to reverse on a cool number, protected on a hot one. The Russell 2000 rallying 0.45% while the S&P fell confirms the trade: small caps are less exposed to the mega-cap AI names that drive the index, so money rotated from large to small as insurance.
The S&P fell two straight days and Hammack said one hike might not be enough, and the market is telling you that CPI isn't just a number tomorrow — it's a fork in the road: below 3.8% and the July rally resumes, the hike stays in December, and the S&P pushes toward JPMorgan's 8,000 target; above 4% and the hawks retake the narrative, September becomes live, and the 30-point pullback becomes a 300-point correction. Hammack's "more than one hike" statement turns the September meeting from a one-decision event into the start of a tightening cycle — if the data supports it. Tomorrow's CPI is the data. The market is bracing for it.
On September 12, 2022, the S&P drifted down 0.4% ahead of the August CPI print. Then the number landed at 8.3% versus the 8.1% consensus — a two-tenth miss. The S&P crashed 4.3% on the release, its worst single day since June 2020. The pre-CPI selloff was a whisper. The post-CPI crash was a scream. A 0.2% miss on CPI produced a 4.3% move in the S&P. Tomorrow's consensus is 3.7%. Every tenth above that shifts billions.
Three things I'm watching tomorrow:
01 — July CPI Wednesday August 12 at 8:30 a.m
Consensus: 3.7% headline, core 3.1%. The July reading captures three to four weeks of gasoline above $4, reflecting the oil surge from $76 to $100. If headline CPI comes in at 3.7% or below — in line or cooler — the market rallies, the hike stays in December, and the S&P is back at a record by Friday. If it comes in at 4.0% or above — a miss driven by energy — Hammack's "more than one hike" becomes the roadmap and the market sells hard. The gap between 3.7% and 4.0% is the difference between a December hike and a September one. Three tenths of a percent. That's what the market is waiting for.
02 — CoreWeave and Super Micro after-hours tonight
Two AI infrastructure names reporting tonight. CoreWeave — the Nvidia-backed cloud company that's been down 30% since May — needs to show that its $2.5 billion revenue quarter is real and that customer concentration is stabilizing. Super Micro needs to show it can produce AI servers profitably after a year of accounting and governance headlines. Strong results from both confirm the infrastructure buildout is still accelerating. Weak results add fuel to the "AI spending peaked" narrative heading into CPI morning.
03 — How does oil react to CPI?
Oil topped $83 on Tuesday. Iran is still saying no to Washington's conditions. If CPI is cool, oil pulls back because the inflation narrative weakens and the Fed stays on hold — bullish for growth, bearish for commodities. If CPI is hot, oil might paradoxically fall too — because a hot CPI means the Fed hikes, which slows the economy, which reduces oil demand. The only scenario where oil goes up on CPI is if the number is mixed: headline hot but core cool. Watch the first 30 minutes after 8:30 a.m. The oil reaction tells you what the bond market thinks.
Hammack said one hike might not be enough. The market sold for a second day. Alphabet fell nearly 4%. And Nvidia just lined up $500 billion for the next wave of AI buildout. Tomorrow at 8:30 a.m. the CPI lands. Everything that happened this week was the setup. Tomorrow is the payoff.
That's it for today. See you tomorrow after the close.
— Tom Hartley
Today In Perspective · Published daily, Monday–Friday, after the close
This newsletter is for informational purposes only and does not constitute investment advice. The author is not a registered investment advisor. Past performance does not guarantee future results. Consult a qualified financial professional before making investment decisions.
