Nasdaq slips as US CPI dims Fed cut hopes

US consumer price data showed tariffs pushing up costs on imported goods like coffee and furniture, prompting traders to scale back bets on Fed rate cuts and pulling the Nasdaq and S&P 500 off record highs. The Dow fell 1%, the S&P 500 dropped 0.4%, while the Nasdaq edged up 0.2% on Tuesday. Attention turns to US producer prices and UK CPI today, while Fed Chair Powell faced renewed political pressure from Donald Trump, who suggested Treasury Secretary Scott Bessent as a possible successor.

Equities

The FTSE 100 fell 0.7% to 8,938.32 on Tuesday after briefly crossing the 9,000 mark for the first time, pulled lower by concerns over rising US inflation and the potential impact of tariffs. The mid-cap FTSE 250 index slipped 0.2%.

Among UK-listed firms, Experian rose 4.3% after the company reported 8% organic revenue growth in the first quarter and reaffirmed its full-year outlook. The credit data provider pointed to strong performance across North America and Latin America.

Barratt Redrow dropped 8.9% after it said it missed home completion targets for the 2025 financial year. The UK’s largest housebuilder did not meet expectations despite relatively stable market conditions, raising questions about housing demand and project delivery timelines.

GSK fell 1.5% following news that the US FDA had raised safety concerns over its blood cancer drug Blenrep. The agency warned of possible eye damage when the treatment is used alongside other medications.

In the US, the S&P 500 fell 0.4% to 6,243.76, weighed down by weakness in banking shares and a jump in June consumer prices, which marked the biggest monthly increase in five months. The Dow Jones Industrial Average dropped 0.98% to 44,023.29.

The Nasdaq Composite rose 0.18% to 20,677.80, closing at a record high for the fourth time in five sessions, helped by strength in major tech stocks.

Nvidia climbed 4% after confirming it would resume sales of its H20 artificial intelligence chip to China. The announcement lifted the wider semiconductor sector, with Advanced Micro Devices and Super Micro Computer both rising more than 6.4%. The semiconductor index gained 1.3%, while the S&P technology sector also added 1.3% to close at a record high.

Citigroup rose 3.7% to its highest level since 2008 after strong trading revenue pushed second-quarter profits ahead of expectations. JPMorgan slipped 0.7% despite raising its 2025 net interest income forecast. Wells Fargo fell 5.5% even after a profit increase, driven by lower loan-loss provisions. BlackRock slid 5.9% despite reporting a new record for assets under management.

Forex & Commodities

The dollar held firm on Wednesday, trading near a one-month high at 98.54, supported by a rise in US Treasury yields after consumer price data showed tariffs are starting to affect import costs. The 10-year yield reached 4.495%, the highest in a month, while the two-year yield stood at 3.9463%. Against the yen, the dollar touched 149.19 before easing to 148.91, a 3½-month high. The euro and pound traded lower, at $1.1616 and $1.3395 respectively, both near three-week lows.

US inflation data showed a clear rise in June, particularly in prices of goods such as coffee and home furnishings, with evidence that higher import tariffs are feeding into consumer costs. This has led traders to scale back expectations for Federal Reserve rate cuts this year, now pricing in 43 basis points of easing by December, down from just over 50 basis points earlier in the week. Focus now shifts to producer price data, due later on Wednesday, for further signs of inflation pressure.

Gold gained 0.5% to $3,337.29 an ounce, supported by a slight retreat in the dollar and bond yields. The pullback came despite continued pressure on Fed Chair Jerome Powell, who has faced public criticism from Donald Trump, raising speculation over a possible change in leadership.

Brent crude rose 0.2% to $68.84 a barrel, while US crude climbed 0.4% to $66.77. Demand indicators remain supportive, with strong US gasoline consumption around the Fourth of July and China’s June refinery throughput rising 8.5% year-on-year. However, analysts noted the rebound may be short-lived, with price moves more linked to technical factors than shifts in supply or demand.