The S&P 500 crossed 7,800 for the first time in its history. Producer prices came in flat for July — below the 0.2% increase economists expected. That's two inflation readings in two days, both cooler than feared. CPI in line on Wednesday. PPI below expectations on Thursday. Oil fell 2%. The 2-year yield dropped 6 basis points to 4.14%. Money markets pushed the September hike probability from 50% to 35%. The Nasdaq gained 0.81%. The Russell 2000 hit a record. Meta, Micron, and Netflix led the gains. Cisco fell 9% despite posting record revenue of $17.3 billion — because its margin guidance missed by four-tenths of a percent. Cerebras crashed 13% on a revenue miss. The inflation story gave the market a green light. The earnings story reminded it that the light comes with conditions.
Record close, broad participation. The S&P surged 0.65% past 7,800 for the first time — a new all-time high, its second record in four sessions. The Nasdaq climbed 0.81% to about 26,804. The Dow inched up 0.13%. The Russell 2000 hit a record high as well — both the large-cap and small-cap benchmarks printing new highs on the same day, a sign the rally is broadening. Communication services and financials led the sectors. Energy fell as oil dropped 2%, with Brent settling at $87.07 and WTI at $81.25.
| The Numbers I Circled | At the close, August 13 · Day change |
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| S&P 500 | 7,800+ | new record |
| July PPI | 0.0% monthly | beat +0.2% est |
| Sept Hike | 35% odds | from 50% |
| S&P 500 Sectors | Day change |
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| Comm. Services | | +0.5% |
| Financials | | +0.5% |
| Health Care | | +0.4% |
| Consumer Staples | | +0.3% |
| Industrials | | +0.2% |
| Utilities | | +0.1% |
| Consumer Disc. | | 0.0% |
| Info. Technology | | −0.1% |
| Real Estate | | −0.2% |
| Energy | | −0.3% |
| Materials | | −0.8% |
| | Notable Gainers | Day change |
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The PPI data sealed the inflation case. Headline producer prices were flat for the month — zero increase. The consensus expected 0.2%. On an annual basis, PPI came in at 4.7% versus the 4.9% estimate. Core PPI rose 0.2% for the month versus the 0.3% consensus. Bill Adams at Fifth Third Bank noted that the headline was cooler than expected, driven by declines in energy prices, food prices, and transportation costs. That's two days of data telling the same story: the price pressures from July's $100 oil spike are fading faster than the hawks expected.
Cisco was the day's paradox. The networking giant posted record fourth-quarter revenue of $17.3 billion — up 18% year over year — and beat on earnings per share with $1.22 versus the $1.17 estimate. Full-year revenue hit $63.3 billion, also a record. The stock fell 9%. The reason: first-quarter gross margin guidance of 65% to 66% came in below the 66.4% consensus. Record revenue, record earnings, and the market sold it on four-tenths of a percentage point of margin. Cerebras fell 13% after missing on revenue — $180 million versus the $194 million estimate — even as its core revenue doubled and its cloud business nearly quadrupled.
Applied Materials reports after the close tonight — the last major semiconductor equipment name of the season. OPEC and the IEA both downgraded their oil demand forecasts this week.
What The Market Is Pricing In
Yesterday CPI told the market what consumers are paying. Today PPI told it what businesses are paying. When both numbers come in cool — CPI in line at 3.4%, PPI flat versus a 0.2% increase expected — the market gets what it calls a "double confirmation." Consumer prices aren't accelerating. Business input costs aren't either. And because producer prices tend to lead consumer prices — businesses raise retail prices after their own costs rise, not before — a flat PPI today suggests the next CPI will stay tame or improve.
That's why the S&P crossed 7,800 and the 2-year yield fell 6 basis points. The 2-year is the part of the curve most sensitive to what the Fed does next. When it drops, it means the bond market is pricing less tightening. And 35% odds for a September hike — down from 50% — means the market now sees a two-in-three chance that the Fed holds. Two weeks ago it was a coin flip. Now it's a long shot. The data moved the odds.
The S&P crossed 7,800 for the first time and the Russell hit a record on the same day PPI came in flat, and the market is telling you the July inflation scare — $100 oil, three Fed dissenters, 30-year at 5.26% — is being unwound print by print, because the data says the price surge was a supply shock from the Strait blockade, not a demand-driven reacceleration, and supply shocks fade when the supply stabilizes. Oil is at $81, down from $100 three weeks ago. OPEC and the IEA both cut demand forecasts. The June oil collapse from $95 to $76 is flowing through into the July CPI and PPI readings, and if the Strait opens — even partially — the August readings will be even softer. Hammack said this week it may take more than one hike. But the data isn't giving her the ammunition. Two cool prints say hold.
In July 2023, back-to-back soft CPI and PPI data pushed the S&P to a new year-to-date high and confirmed the Fed would pause its hiking cycle at the September meeting. The pattern today is identical: CPI in line, PPI below expectations, S&P at a record, September hike odds collapsing. The market is following the same script because the data is telling the same story — the inflation peak is behind, and the Fed can wait.
Three things I'm watching tomorrow and next week:
01 — Applied Materials earnings tonight after the close
The last major semiconductor equipment name. AMAT builds the machines that manufacture advanced chips for TSMC, Samsung, Intel, and every AI-focused foundry. Consensus expects $3.39 EPS on $9 billion revenue. The stock is up 190% in the past year. If AMAT beats and guides higher, the equipment cycle is intact and the AI hardware buildout has runway into 2027. If it misses — like Cerebras today — the cycle is peaking and the 190% rally is priced for perfection.
02 — Nvidia earnings August 26
Two weeks away, and already the dominant overhang. Bank of America reiterated Buy this week and called Nvidia shares "cheap." The market expects Nvidia to beat revenue expectations and raise its outlook — which it has done for six straight quarters. The Vera Rubin chip launch and data center demand from the CoreWeave and Super Micro cycle are the catalysts. If Nvidia delivers, the S&P has a path to JPMorgan's 8,000 target. If it disappoints, every AI stock reprices.
03 — Oil below $82 — does it stay there?
Brent at $87 and WTI at $81 — both down 2% today. OPEC and the IEA both cut demand forecasts. The Strait remains closed but the war premium is fading as the market prices in a stalemate, not an escalation. If oil holds below $82 through next week, August CPI will be softer than July's and the inflation story is done for 2026. If it bounces back above $85 on a Strait escalation, the August reading gets messy and the hawks revive.
The S&P crossed 7,800. The Russell hit a record. Producer prices were flat. Oil fell 2%. The September hike is at 35%. Two inflation readings in two days said the same thing: the price surge from July was a shock, not a trend. Tomorrow Applied Materials tells you whether the AI equipment cycle is still running. In two weeks Nvidia tells you whether the whole trade holds.
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.
