New York, July 14, 2026, 09:11 EDT
U.S. inflation’s biggest monthly drop since April 2020 lifted Nasdaq futures on Tuesday, but the detail was less benign: energy subtracted 0.437 percentage point from June consumer prices, more than the reported 0.4% fall, while prices outside energy added 0.015 point. The headline overstated the breadth of relief.
Headline inflation slowed to 3.5% from 4.2% in May, beating the 3.8% estimate in a Reuters poll. Core CPI, which strips out food and energy, was unchanged from May and rose 2.6% from a year earlier, also below forecasts. The report landed an hour before a normal 9:30 a.m. EDT cash-market opening. That gave investors a clean test of the interest-rate outlook.
Nasdaq 100 futures posted the strongest response, gaining 1.38% three minutes after the release. That put the technology-heavy contract 0.90 percentage point ahead of S&P 500 futures and 1.39 points ahead of Dow futures. Growth shares, whose valuations tend to benefit when expected rates fall, carried the move. The market bought the rates story.
| U.S. equity futures | Move at 08:33 EDT | Nasdaq 100 lead |
|---|---|---|
| Dow e-minis | -0.01% | 1.39 percentage points |
| S&P 500 e-minis | +0.48% | 0.90 percentage point |
| Nasdaq 100 e-minis | +1.38% | — |
The Dow’s divergence also had a large company-specific cause. International Business Machines Corp. NYSE:IBM fell about 22% after forecasting preliminary second-quarter revenue of $17.2 billion, below the $17.86 billion analyst estimate, as clients shifted capital spending towards servers, storage and memory. Chief Executive Arvind Krishna said the company had “faltered” in adapting quickly enough. This was not a uniform risk-on rally. Reuters
The more useful investor comparison sits inside the CPI contribution data. Gasoline alone removed 0.394 percentage point from the monthly index, accounting for nearly all of energy’s drag. Non-energy prices, taken together, did not fall. The numbers tell a narrower story.
| CPI measure | June change from May | Contribution to headline CPI |
|---|---|---|
| Headline CPI | -0.4% | — |
| Energy | -5.7% | -0.437 percentage point |
| Gasoline | -9.7% | -0.394 percentage point |
| All items excluding energy | 0.0% | +0.015 percentage point |
BLS contribution figures use unrounded data, so they need not match the one-decimal headline exactly.
The same energy move gave households a sharp, if potentially brief, income boost. Real average hourly earnings — pay adjusted for inflation — rose 0.8% from May after falling in each of the prior three months, even though nominal hourly pay increased a more modest 0.3%. That could support near-term consumption. The gain rests on cheaper prices, not a sudden wage surge.
Business pricing data released on Tuesday offered a counterweight. A net 38% of small-business owners reported raising selling prices in June, the highest share since January 2023, while 21% named inflation as their biggest problem. Planned increases eased by two points to a net 32%, however. NFIB Chief Economist Bill Dunkelberg said “high interest rates and modest economic growth are causing owners to approach hiring and capital spending with caution.” Small firms are not declaring victory. NFIB – NFIB Small Business Association
Energy has already begun to reverse June’s help. The U.S. average gasoline price rose to $3.86 a gallon on Tuesday from $3.79 a week earlier, while oil climbed to a four-week high after renewed disruption around the Strait of Hormuz. June’s energy discount may be fading before investors have finished trading it. The next inflation report may not get the same lift.
But the risk cuts both ways. Core prices were flat, shelter rose just 0.1% — its smallest monthly increase since January 2021 — and small firms’ planned price increases declined despite the rise in actual increases. A renewed oil shock could lift July’s headline rate, while calmer energy markets would leave evidence that underlying price pressure is easing. One month cannot settle it.
Federal Reserve Chair Kevin Warsh is due before the House Financial Services Committee at 10 a.m. EDT. “If we get policy right — and we will — the inflation surge of the last five years will be a thing of the past,” he said in prepared testimony. Investors will listen for whether he puts more weight on the temporary energy drop or the softer core and shelter readings. The market wants proof. House Financial Services Committee
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