Futures Rally: Dow +240 After July CPI 2.7% - 90% Odds of September Fed Cut, But Core CPI 3.1% Keeps Markets Cautious

U.S. stock futures ripped higher Tuesday after July's consumer-price print came in a touch softer than economists had penciled in - an outcome that quickly ramped up expectations for a rate cut from the Federal Reserve in September.

At about 08:45 ET, Dow Jones futures were up roughly 240 points (around 0.6%), S&P 500 futures were higher by about 0.6% (+38 points) and Nasdaq 100 futures were trading roughly 0.7% firmer (+160 points). Those gains come after a mixed session on Wall Street a day earlier, with the Nasdaq Composite and S&P 500 still lingering near record territory, buoyed by a broadly solid second-quarter earnings run.

The Bureau of Labor Statistics reported the headline consumer price index rose 2.7% year-over-year in July - unchanged from June and a shade below the 2.8% economists expected. On a monthly basis CPI was up 0.2%, matching consensus and cooling from June's 0.3%.

There's a catch: core CPI, which strips out food and energy, climbed 3.1% year-over-year - higher than the 3.0% estimate - and rose 0.3% versus June. In short: headline inflation is steady, but the underlying measure remains stickier than some traders had hoped.

Combine that with a soft July jobs report and downward revisions to prior months, and markets pushed the odds of a 25-basis-point Fed cut in September to roughly 90%. That recalibration is the immediate fuel for the futures rally - traders pricing in easier policy next month while still keeping an eye on core inflation's trajectory.

Politics is in the mix too. President Donald Trump nominated economist E.J. Antoni to run the Bureau of Labor Statistics after firing Erika McEntarfer following the weak jobs release earlier this month. The appointment requires Senate confirmation. Trump has publicly accused McEntarfer of manipulating figures, an allegation presented without evidence.

On the single-stock front, broadcasters and select tech names led the premarket movers. Sinclair (NASDAQ: SBGI) jumped after announcing a strategic review that includes possible merger options or a ventures-unit spin-off. Specialty chemicals maker Celanese (NYSE: CE) slumped after warning of softer demand across key end markets in H2. Tencent Music Entertainment Group (NYSE: TME) beat Q2 estimates and climbed, while autonomous-vehicle operator Pony Ai (NASDAQ: PONY) reported a revenue surge and said it's tracking toward its year-end vehicle targets, sending its stock higher in premarket trade.

Energy markets moved the other way. Brent crude slipped about 0.6% to roughly $66.22 a barrel and U.S. WTI fell near $63.51, down roughly 0.7% at the same update. The temporary tariff truce between Washington and Beijing eased some growth fears, but the calendar still carries risk: President Trump and President Vladimir Putin are scheduled to meet in Alaska on Friday to discuss the Ukraine conflict - a development traders flagged as a possible influence on oil supply sentiment.

So where does this leave markets? Equity futures reacted as if a September cut is baked in, but the hotter-than-expected core CPI keeps a check on unbridled optimism. Which of the two - headline calm or core persistence - ends up steering the September debate is the question traders will be parsing into next week.