Markets rallied globally after the US Producer Price Index (PPI) for July 2026 came in cooler than expected, rising 4.7% year-over-year compared to the 5.0% forecast and June’s 5.5% pace, with the core PPI at 4.2% versus a 4.3% forecast and 4.7% previous reading [1][2]. This reinforced expectations that the Federal Reserve will hold off on raising interest rates at its September meeting, with money markets trimming the odds of a September rate hike to under 40% [1]. According to Prime Terminal, the probability of a rate hike by the end of the year dropped to 67%, down from 70% the previous day [2].
The S&P 500 touched a fresh record high above 7,816 before closing near 7,800, up roughly 0.67% on the day, while the Nasdaq 100 outperformed with a gain of about 1.15% [1]. The rally was driven by a surge in US semiconductor shares, which also lifted Asian markets: Japan’s Topix hit a record high, the Nikkei rose about 1.6%, and South Korea’s Kospi jumped around 4% on heavy buying in Samsung and SK Hynix [1]. Among individual stocks, SanDisk surged around 14%, while Intel, FedEx, Netflix, and Meta posted smaller gains. Cisco fell about 8% on cautious revenue guidance, and Workday climbed on takeover speculation [1].
In the currency markets, the US dollar closed mixed but slightly firmer against most major currencies [1]. The EUR/USD pair held firm above 1.1500, trading at 1.1529, as softer US inflation data contrasted with hotter Spanish inflation, which hit 3.9%, its highest since May 2025 [2]. Money markets are pricing in an 87% probability that the European Central Bank will increase rates by a quarter of a percentage point at its September meeting [2].
US initial jobless claims for the week ending August 8, 2026, rose to 209,000, above the 204,000 forecast and the previous 199,000, but remained close to the four-week average [1][2]. Looking ahead, investors are awaiting Euro area GDP figures, expected to show 0.4% quarter-over-quarter and 1% year-over-year growth, and US July retail sales, forecast at 0.1% month-over-month [2].
Fed officials offered mixed signals, with Richmond Fed President Tom Barkin arguing for holding rates steady given signs of cooling inflation, though he acknowledged some lingering price pressures [1].
CONCLUSION
Softer-than-expected US producer inflation data has reinforced expectations that the Federal Reserve will pause rate hikes in September, fueling a global equity rally and supporting the euro. Market participants are now focused on upcoming economic data from both the Euro area and the US for further direction. The overall sentiment remains positive, with risk assets and the euro benefiting from the disinflation trend in the US.