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Falling gas prices contributed to slower inflation in July.
Credit: Brandon Bell / Getty Images

Key Takeaways

• Inflation was relatively tame in July, with the Consumer Price Index rising 3.4% over 12 months.
• Although inflation is still well above the Fed’s target of a 2% annual rate, it’s headed in the right direction for two months.
• If inflation stays cool in August, the Fed may avoid raising interest rates to bring inflation down to its target. However, the war in Iran could spoil those expectations if it causes gas prices to rise again.

Inflation simmered down for a second month in July, hinting at some relief for households and the economy.

The cost of living as measured by the Consumer Price Index rose 3.4% over 12 months in July, down from a 3.5% annual increase in June, the Bureau of Labor Statistics said Wednesday.

The “core” price index, which excludes the volatile prices for food and energy, rose 2.5% over the year, down from a 2.6% annual increase in June and reaching the lowest since February.

What This Means For The Economy

The trend of cooling inflation could could benefit both consumers and the broader economy if it continues, however the outlook is uncertain because the Iran war still threatens to push up energy prices and drive inflation up again.

It was the second month that the widely watched inflation gauge slowed. CPI hit a recent peak of 4.2% in May, driven by the war in Iran, which pushed up fuel prices. A lull in the conflict helped gasoline prices fall in July, and inflation along with it.

However, gasoline and diesel prices rose again in August after the conflict intensified again, once more disrupting energy supplies from the Persian Gulf. A gallon of regular unleaded gasoline averaged $4.04 Wednesday, up from $4.88 July 12, according to AAA.

“America still has an inflation problem, but there are encouraging signs that price pressures outside of the gas pump are easing,” Heather Long, chief economist at Navy Federal Credit Union, wrote in a commentary.

Grocery prices fell 0.1% from June, while gasoline decreased 2.9%, offering some relief in categories that have proven especially painful for household budgets in recent months. Medical care commodities and motor vehicle insurance prices also fell.

Some other prices rose, however, including “core” goods, which rose 0.2% over the month, the largest increase in the category since September. A price hike for Apple devices contributed to the increase.

Despite the deceleration in July, inflation is still running above the Fed’s target of a 2% annual rate. That’s squeezing household budgets and raising concerns the Federal Reserve will have to raise its benchmark interest rate to push it down to its target of a 2% annual increase.

Although the Fed prefers a different inflation measure, core Personal Consumption Expenditures, as its benchmark for the inflation target, CPI and PCE tend to follow similar trends. Both inflation gauges are running below the four-decade highs they hit in the aftermath of the pandemic in 2022, but have stayed stubbornly above the Fed’s target for five years.

Wednesday’s inflation data was good enough for financial markets to pare back their bets that the Fed will raise its benchmark interest rate at its next meeting in September. Traders were pricing in a 40% chance of a September rate hike Wednesday, down from a coin toss the day before. Fed officials will see August’s inflation data before making the decision, however.

“The combination of negative month-over-month headline CPI and core inflation holding around 2.6% gives the Fed the narrative it wants: we’re seeing some cooling, but there is no collapse in the economy. Prices in some areas are stabilizing and, in some cases, coming down,” Luke Rahbari, CEO of Equity Armor Investments, wrote in a commentary. “That said, we’ve had so many starts and stops with the war in the Middle East, along with wild swings in oil and gasoline prices, that this picture could change day to day.”

Update, Aug. 12, 2026: This article has been updated with more details from the inflation report and commentary from economists.

Morgan Stanley expects SpaceX’s Cursor acquisition to generate $33 billion in revenue by 2030.
Credit: Justin Sullivan / Getty Images

Key Takeaways

• Morgan Stanley analysts say investors are undervaluing SpaceX’s AI business, including its neocloud partnerships.
• They said SpaceX’s acquisition of Cursor could drive significant revenue growth, with Cursor’s annual revenue run rate seen reaching $33 billion by 2030.

Wall Street’s expectations for SpaceX’s AI unit are so low, it may not need a pogo stick—let alone a rocket—to clear the bar, Morgan Stanley analysts argued in a recent note.

“The implied valuation for SpaceX’s AI business at the current price is, in our opinion, extremely conservative,” analysts led by Adam Jones wrote in a note late Monday arguing investors are failing to appreciate the AI potential that underpins their $300 price target. 

“From our conversations, very few investors are bullish SpaceX’s AI business beyond neocloud,” they wrote, referring to the lucrative data center leasing deals SpaceX has struck with Anthropic and Alphabet. Though, by Morgan Stanley’s estimates, investors aren’t ultra-bullish on that business, either. They calculate investors are currently valuing SpaceX’s entire AI business at $12 a share, “well below even neocloud peers.” 

Morgan Stanley says investors are also underestimating upside from SpaceX’s impending acquisition of Cursor, the AI coding agent platform it agreed to buy in June for $60 billion. Once the acquisition closes later this quarter, Morgan Stanley believes the rollout of new Grok models incorporating Cursor data and updates on Cursor’s revenue growth could be catalysts that brighten the outlook for SpaceX AI. 

Enterprise AI adoption is growing fast, with the median monthly AI spend per employee growing 167% year-over-year to $11 in June, according to the Ramp AI Index. The top 1% of companies in terms of AI spending are shelling out nearly $5,000 per employee for AI services every month. And there’s still room for growth. By Ramp’s measure, nearly half of U.S. companies spend no money at all on AI products or services, and the Census Bureau puts that figure at 80%.  

Morgan Stanley expects Cursor’s annual revenue run rate to skyrocket from $4 billion in June to $8 billion by year-end, $17 billion next year, and $33 billion by 2030. “As investors see more breadcrumbs on the Cursor/Grok story, we see potential for the implied valuation discount on SpaceX’s AI business to lift, driving potentially substantial appreciation of the stock,” the analysts wrote. 

SpaceX (SPCX) stock tumbled nearly 5% yesterday after closing on Monday above its $135 IPO price for the first time since mid-July. Shares pointed 1% higher in premarket trading Wednesday.

News of the day for Aug. 12, 2026

U.S. stocks have had a sluggish start to the week after the Dow and the S&P 500 hit a series of record highs last week.
Credit: Liu Yanan / Xinhua / Getty Images

Stock futures are higher after two days of losses for major indexes as investors digest tech sector earnings reports and await a key inflation reading; the July CPI report is expected to show a second straight month of cooling inflation; CoreWeave stock is surging after the cloud provider reported strong quarterly results; Super Micro Computer shares are also gaining thanks to a strong outlook; and Cava shares are on the rise after the fast-casual chain reported solid results. Here’s what you need to know today.

Stock Futures Point Higher After Two Days of Declines

Stock futures are gaining ground this morning as markets look to rebound from two straight days of losses to open the week. Futures contracts tied to the tech-heavy Nasdaq and the S&P 500 were recently up 0.7% and 0.3%, respectively, while Dow Jones Industrial Average futures added 0.2%. The major indexes all pulled back yesterday while oil prices climbed. WTI crude oil futures were little-changed this morning after jumping above the $83 per barrel mark yesterday as investors reacted to the latest public comments by Iran and the Trump administration that have made an imminent deal look increasingly unlikely. Gold futures were up nearly 1% to $4,475 an ounce, the precious metal’s highest point in over two months, while bitcoin rose slightly to $64,200 after two days of modest declines. The yield on the 10-year Treasury note, which affects interest rates on all sorts of loans, was at 4.67%, down from yesterday’s close of 4.70%.

July Inflation Data Due Out This Morning

The Consumer Price Index report for July, scheduled for release at 8:30 a.m. ET, will give investors their latest look at how the Iran war is affecting the economy. The index is expected to show that prices rose by 3.4% year-over-year in July, decelerating from a 3.5% jump in June, with “core” inflation—which excludes volatile food and fuel prices—seen coming in at 2.5%, down from 2.6% in June. Easing oil prices amid the U.S.-Iran ceasefire helped cool inflation in June and may have done so again in July, but the pickup in fighting and oil prices towards the end of the month and into August may have limited that slowdown. A hotter-than-expected inflation reading could renew concerns that the Federal Reserve will need to raise interest rates soon. Fed Chair Kevin Warsh has said repeatedly since taking over the top role at the central bank in May that bringing inflation back down to the Fed’s 2% target is his top priority.

CoreWeave Stock Surges After Strong Results

CoreWeave (CRWV) shares are soaring after the cloud computing provider topped estimates in its latest quarterly results. The company said after Tuesday’s closing bell that it generated $2.58 billion in revenue in the second quarter, narrowly above what analysts had forecast, while its net loss of $1.14 per share was smaller than expected. CoreWeave’s backlog of $104 billion came in about $4 billion shy of estimates, but the company noted that it has already added about $25 billion in new commitments to that backlog through the early part of the third quarter. Shares were up 18% ahead of the opening bell, extending a recent rally. Through Tuesday’s close, Coreweave stock had gained nearly 50% since hitting its 52-week low two weeks ago.

Super Micro Computer Stock Rallies as Profits, Outlook Tops Estimates

Shares of Super Micro Computer (SMCI) are also surging premarket after the server maker’s profits blew past estimates. Supermicro, as the company is known, announced late Tuesday that it posted adjusted earnings of $1.70 per share in its fiscal fourth quarter, nearly double the 94 cents that analysts were looking for. The company—which last month warned that sales for the period would likely come in at the low end of its prior guidance of $11 billion to $12.5 billion—reported revenue of $11.1 billion. For the current quarter, Supermicro expects revenue of between $14.5 billion and $15.5 billion, well above the $11.84 billion analyst consensus, along with adjusted earnings between $1.01 and $1.10 per share, also above estimates. Supermicro shares were up 9% in recent premarket trading.

Cava Stock Climbs on Solid Earnings, Sales Growth

Gains are also coming outside of the tech sector today, with shares of Cava Group (CAVA) rallying after the fast-casual Mediterranean restaurant chain posted results. The company reported second-quarter revenue of $368.44 million, up more than 30% year-over-year and better than analysts had forecast. Earnings of 19 cents per share came in 1 cent ahead of estimates, while same restaurant sales grew by 9%, topping the 7.4% Visible Alpha consensus. The company maintained its full-year outlook, expecting to open 75 to 77 new restaurants this year with same restaurant sales growing by 4.5% to 6.5%. Cava shares were up 17% recently after entering the day nearly flat for the year.

Applied Materials shares have doubled in value since the start of the year, though they’ve pulled back from their June highs.
Credit: Samuel Boivin / NurPhoto / Getty Images

Key Takeaways

• Applied Materials is scheduled to report earnings Thursday after markets close, with traders anticipating the stock could swing up to 7% by the end of the week.
• The maker of semiconductor manufacturing equipment is expected to report another quarter of solid sales and profit growth as chipmakers look to boost production.

Applied Materials is slated to report earnings after the closing bell on Thursday, with traders expecting a big move from the chipmaking equipment provider’s stock.

Based on recent options pricing, Applied Materials (AMAT) shares are seen swinging up to 7% in either direction by the end of the week. A move of that size from Tuesday’s close could see shares rebound to $564, where it was last month, or slip below $488.

Shares of Applied Materials have doubled in value since the start of the year, though they’ve pulled back nearly 30% from their June highs. Chipmakers have been spending heavily to expand production to meet the demand for AI chips, boosting Applied Materials’ sales and profits.

Why This Matters to Investors

Thursday’s results could be taken as a signal of how chipmakers are feeling about the state of AI demand.

UBS analysts recently hiked their price target for Applied Materials to $705 from $570, telling clients they see “clearer evidence that equipment companies are raising pricing to drive margins higher.”

Analysts are expecting Applied Materials to report record revenue of $9.04 billion for the fiscal third quarter, up 25% year-over-year. Adjusted earnings are seen coming in at $3.42 per share, up from $2.48 the same time a year ago, per Visible Alpha.

Analysts are largely bullish on Applied Materials. Ten of the 12 analysts tracked by Visible Alpha have recommended buying the shares, compared to two neutral ratings. Their average price target of $689 would suggest over 30% upside from Tuesday’s close.

Cisco shares have rallied close to 60% since the start of the year
Credit: CFOTO / Future Publishing / Getty Images

Key Takeaways

• Cisco is due to report earnings Wednesday afternoon, with options pricing suggesting traders see the stock swinging up to 7% by the end of the week.
• The networking giant is expected to report growing sales and profits as big tech companies spend heavily on AI data centers.

Cisco is set to post earnings after the closing bell Wednesday, with traders anticipating a move that could bring the stock back near its June highs.

Cisco (CSCO) stock is seen swinging up to 7% in either direction by the end of the week, based on recent options pricing. A move of that size from Tuesday’s close could see the stock rise as high as $129, just short of its early June record, or drag it below $112.

Cisco shares have rallied close to 60% since the start of the year, as AI-driven demand for the company’s networking hardware has boosted the stock, though they’ve slipped from their highs amid a broader pullback in the AI trade.

Why This Matters to Investors

A strong print from Cisco could help stoke fresh enthusiasm for the shares, which have slipped from their highs lately.

UBS analysts wrote ahead of the report that they see Cisco topping Street estimates with its quarterly results, though they warned conservative forecasts for fiscal 2027 “could be modestly disappointing for the shares.”

Cisco is expected to report fiscal fourth-quarter revenue of $16.83 billion, up about 15% year-over-year, along with adjusted earnings of $1.17 per share, up from 99 cents per share the same time a year ago, according to Visible Alpha estimates.

Analysts are broadly bullish on Cisco. Five of the eight analysts tracked by Visible Alpha recommend buying the networking giant’s stock, with the remaining three holding neutral ratings. Their mean price target of $132 would suggest close to 10% upside from Tuesday’s close.

Fewer Americans aged 55 and over are staying in the workforce as rising stock prices, retirement decisions, and labor market trends reshape participation rates.
Credit: Thomas Barwick / Getty Images

Key Takeaways

• The percentage of people 55 and over in the workforce hit a two-decade low in July.
• Economists theorize that one reason for the plunge in workforce participation is that soaring stocks have fattened retirement accounts.
• Another theory is that it’s hard for older workers to find work in the low-hire, low-fire labor market.
• Alternatively, the decrease may have been exaggerated by a statistical adjustment the government made back in January.

Older people aren’t working as much anymore, and experts are pointing to at least three good reasons why.

In July, the labor force participation rate for Americans 55 and over fell to 36.7%, a fresh low since 2005 and continuing a nosedive that started during the pandemic, according to the Bureau of Labor Statistics. Economists have found several possible explanations for this trend, one of which is encouraging for people considering retirement themselves.

The most optimistic explanation is that people are choosing to retire because their 401Ks are so fat. As noted by economists at Bank of America this week in a research note, the plunge in the 55-and-over workforce coincides with a rise in the value of the S&P 500 stock index and, hence, the value of workers’ nest eggs.

“Who needs income if you have wealth?” researchers at BofA asked, attributing the dip in participation to a “stock-fueled retirement party.”

What This Means for the Economy

A decreasing workforce could be a challenge for the economy, especially as the population ages due to low birth rates.

The story may be a bit more complicated than that, however.

In January 2026, the BLS—the government’s statistical agency that tracks workforce participation rates—decided there are more people over 65 than they had thought previously, based on data from the Census Bureau. Because people that age are less likely to work, adding them into the data made the official workforce participation rate plummet, at least on paper. Put another way, the statistics caught up to demographic reality.

“Even when the participation rate for each different age group remains unchanged, changing the population mix affects the overall rate,” Alexander Bick, an economist at the Federal Reserve Bank of St. Louis, wrote in a blog post analyzing the phenomenon.

Another, more pessimistic reason for the decline may be that it’s difficult to find a job in today’s low-hire, low-fire labor market, so some older people may have given up looking. As of July, the hiring rate (the number of people hired as a percentage of the overall employed workforce) was 3.4%, down from over 4% in the post-pandemic era when the labor market was hot.

It may be a mix of all three.

“My hunch is that this is at least partially attributable to wealth effects from record highs in the stock market,” Adam Shapiro, vice president of the San Francisco Fed, wrote in a blog post. “But also, the hiring rate is still below 4%, meaning job search costs are high. So these individuals are likely just retiring instead of searching to find a new job.”

Factors including the U.S. economy’s resilience and an uptick in dealmaking have aided the broadening of market returns.
Credit: Nicolò Campo / LightRocket via Getty Images

Key Takeaways

• The equity market shifted from early- to mid-cycle in recent months as high-flying chip and tech hardware stocks stumbled and investors rotated into “old economy” stocks with durable earnings and free cash flows, according to Morgan Stanley analysts.
• Experts say the broadening of earnings growth should support a more resilient stock market going forward, while depressed tech valuations have created opportunities to buy growth stocks at value stock prices.

The bull market that began in late 2022 has in recent months appeared to have run its course. Experts say that may be the opposite of what was happening. 

And that could be a good thing. “The U.S. equity market is transitioning from an early- to mid-cycle regime,” wrote Morgan Stanley analysts led by Michael Wilson in a Monday note. “This is a period when leadership shifts from lower to higher quality” as investors put more stock in durable earnings, stable margins and healthy free cash flows. Ultimately, they say, that shift reflects a broadening of earnings growth “that should support greater index resilience as the cycle matures.”

The S&P 500 notched record after record in April and May as AI infrastructure spending and waning war headwinds fueled a blistering chip stock rally, but that came to an abrupt halt in early June. Over the next two months, the index dropped about 1.5% as semiconductor stocks fell into a bear market. Meanwhile, the equal-weight S&P 500 continued to chug along, rising 2.5% over the same period, reflecting strength among the S&P 500’s smaller, less buzzy stocks. According to Goldman Sachs, over June and July, the equal-weight S&P 500 outperformed the more broadly tracked market-weight index by the widest margin since 2009. 

Why This Is Important To Investors

Wall Street analysts have been warning about hazardous market concentration for years as they watched mega-cap tech profits and shares leave the rest of the market in their dust. They argue the broadening of both earnings growth and stock performance this year solidifies the foundation of the current bull market and makes it more resilient to shocks.

Several factors have supported the broadening of market returns, according to Goldman, including the U.S. economy’s resilience and an uptick in mergers and acquisitions. But one of the core reasons, experts say, is the surprisingly widespread strength of profit growth. 

“Earnings strength is no longer confined to a narrow group of mega-cap stocks,” wrote Wilson. The median Russell 3000 stock grew earnings by 15% in the second quarter, a five-year high. With most of the S&P 500 having already reported, nearly 90% of the index has topped earnings estimates and the median beat of 6% is nearly two percentage points above the historical average.

Earnings growth has been juiced by what Goldman Sachs calls a capital expenditures “super cycle.” Tech giants are spending hundreds of billions a year on AI infrastructure like chips, networking equipment, and power generators. But it’s not just Silicon Valley that’s building. Both the Biden and Trump administrations have made improving America’s infrastructure and expanding its industrial capacity key priorities. “The spillover effects of this have boosted the growth prospects and valuation of many ‘old economy’ industries” long neglected by investors in favor of tech. As a result, investors are paying more today for industrials, utilities, and value stocks than nearly any other time in the past 20 years. 

Meanwhile, they’re paying less for technology stocks. Uncertainty about AI’s impact on the software industry has compressed valuations while ballooning profits have caused hardware and equipment multiples to decline. Granted, one of the reasons hardware stocks have slumped recently is that investors know today’s earnings bonanza can’t last forever. “There does not appear to be a valuation bubble, but there may be an earnings bubble,” wrote Goldman. But, with multiples down across the tech sector despite continued earnings strength, “the opportunity to selectively find value in growth areas is rising,” according to Goldman.

Morgan Stanley’s analysts contend the hyperscalers—Alphabet (GOOG), Microsoft (MSFT), Amazon (AMZN), and Meta (META)—“offer a better multi-month risk/reward” than semiconductor stocks considering their resilient core businesses, attractive valuations, and possibility of AI-related upside. Outside of tech, they favor companies with durable earnings, robust free cash flows, and a history of operational efficiency. 

Slowing inflation could be giving shoppers a break, if this week’s CPI report comes in as economists expect.
Credit: Allison Joyce / Bloomberg via Getty Images

Key Takeaways

• Inflation likely slowed in July as gasoline prices fell amid a lull in the war in Iran.
• Decelerating price increases would be a welcome respite for the economy and consumers after years of higher-than-usual inflation.
• Slowing “core” price increases would give the Federal Reserve breathing room to avoid raising interest rates to stamp out high inflation.

Consumers and the economy likely got a bit of a break on prices this summer, if forecasters are correct.

Economists expect a report scheduled for Wednesday will show inflation rose 3.4% over the year in July, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. That reading of the Consumer Price Index would be a deceleration from 3.5% in June.

The “core” index, which excludes the volatile prices of food and energy, is expected to have risen 2.5% over the year, down from 2.6% in June and reaching its lowest since February.

A report in line with expectations would mark a second straight month of deceleration. It could be taken as an encouraging sign that inflation may be returning to a downward trajectory.

What This Means For the Economy

If sustained, cooling inflation would give breathing room to household budgets battered by years of inflation running above the Fed’s target of a 2% annual rate and improve the outlook for consumer spending and economic growth.

Inflation that surged in the wake of the pandemic in 2021 had fallen until early 2025, when the dual shocks of tariffs and later the Iran war pushed inflation measures well above the Federal Reserve’s goal of a 2% annual rate.

Cooling core inflation would be especially welcome news for policymakers at the Federal Reserve. Economists view core indices as more reliable guides to broad inflation trends.

In recent months, a growing number of Federal Open Market Committee members have indicated they’re losing patience with inflation running above 2% for a fifth year. Some are even advocating raising the central bank’s key federal funds rate to push up borrowing costs and curb inflation pressures.

Rate hikes could be averted if inflation is tamed without intervention. Falling fuel prices in July, amid a lull in the Iran war, have likely helped keep inflation from rising too much, economists said.

Forecasters are also looking for decreases in several other categories. Air fares could fall as a result of falling jet fuel costs and hotel rooms could be cheaper after the World Cup ended, Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, said in a commentary.

Tuesday’s rally puts Riot shares up 60% since the start of the year.
Credit: Cheng Xin / Getty Images

Key Takeaways

• Riot Platforms secured a $9.1 billion, 20-year deal to provide computing power to a major AI lab, reportedly Anthropic.
• Shares of Riot Platforms have surged about 60% year-to-date, boosted by growing demand for AI compute.

Riot Platforms shares are surging on a deal with a big name in AI.

Shares of Riot Platforms (RIOT) were up about 4.5% in recent trading, a day after the company secured a $9.1 billion, 20-year deal to supply 191 megawatts of computing power to “one of the world’s leading frontier AI labs.” Bloomberg reported late last night that the lab is Anthropic, citing people familiar with the deal.

The compute will come from Riot’s Rockdale, Texas facility, and be brought online in phases through June 2028. The Anthropic deal is Riot’s second data center agreement, after the company also signed a deal to provide Advanced Micro Devices (AMD) with between 25 and 200 megawatts of “critical IT load capacity” back in January.

Riot, one of several cryptocurrency mining companies pivoting to cloud computing to capitalize on growing AI demand, topped analysts’ estimates with $174.24 million in second-quarter revenue, more than $20 million of which came from its new data center business. Riot recorded a net loss of $237.17 million, nearly double the loss analysts had forecast.

Anthropic and Riot did not respond to requests for comment on the report in time for publication. With Tuesday’s rally, Riot shares have gained roughly 60% since the start of the year.

Shares of Target have risen more than 50% this year.
Credit: Kevin Carter / Getty Images

Key Takeaways

• Target shares have risen more than 50% in 2026, recovering from last year’s lows but still below highs earlier this decade.
• Oppenheimer analysts raised their price target from $140 to $170, citing their expectation that Target’s turnaround efforts and improved store execution drive continued growth.

Step back far enough and you can see how far investors’ perception of Target has fallen. This year, though, they’re buying in, and some experts think the good times can continue. 

Shares of Target (TGT) have risen some 56% in 2026 through Monday’s close, bringing them above any price recorded last year. Still, they remain substantially below highs seen in the decade’s earlier days.

The retail giant, which this year has unveiled a new CEO and a turnaround plan, is set to report quarterly results next week. Oppenheimer analysts on Tuesday wrote that while there could be selling on the results after a strong year for the shares, there could still be a payoff out there for longer-term investors. 

“We expect continued traction with turnaround efforts” next week, they wrote, and said the company could lift guidance for 2026. Today they lifted their price target on the shares from $140—that’s about where the Street’s consensus is, according to Visible Alpha—to $170. 

“We are encouraged by the consistent and better in-store execution across geographies and a clear step-up in newness throughout the store from beauty to food & beverage,” they wrote. “We would take advantage of any profit taking should it materialize on the print.”