Stock Market Update Tuesday August 12, 2025

Stock Market Update Tuesday August 12, 2025 Equities surged to fresh highs after a cooler-than-expected CPI print all but locked in a September Fed rate cut, with futures now pricing the odds above 90%. Thursday’s PPI release is the next macro catalyst, but implied volatility around that data has collapsed in the wake of today’s print. Small caps outperformed sharply on the dovish shift in rate expectations.

Today's Performance:

• SPX +1.1%

• QQQ +1.3%

• IWM +3.0%

Away From Stocks: Rates & Cross-Asset Moves: In Treasuries, the front end rallied hard, with 2-year yields sliding, while the long end saw mild weakness—10-year yields finished up 2bps at 4.29%. Gold and the dollar both slipped modestly, crude fell -1.2%, and the VIX was crushed, closing at 14.75.

Key Macro Events – Thursday August 14

• 08:30 ET – July PPI (m/m): Consensus +0.2% vs. prior 0.0%

• 08:30 ET – July Core PPI (m/m): Consensus +0.2% vs. prior 0.0%

The Producer Price Index (PPI) data will be closely examined for indications of early-stage inflation. This is especially true after today's Consumer Price Index (CPI) release, which didn't yet reflect any effects from tariffs. If the PPI shows higher inflation than expected, it could weaken the market's expectation that the Federal Reserve will maintain an accommodative monetary policy. Conversely, if the PPI meets expectations or indicates lower inflation, it would likely strengthen positive market sentiment.

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President Trump announced a three-month extension to the U.S.–China trade truce, easing near-term tensions between the two largest economies. Under the extension, U.S. semiconductor exports to China will resume, while critical mineral shipments from China to the U.S. will continue uninterrupted. Trump expressed optimism about a longer-term agreement, noting plans to meet with President Xi in the coming months, and reiterated the “strong personal rapport” between the two leaders.