NASDAQ leads gains as US stocks close higher after soft inflation data
June CPI came in cooler than expected, reigniting hopes for Fed rate cuts and sending tech stocks surging
The Nasdaq Composite climbed 1.07% on Monday after the June Consumer Price Index showed inflation declining faster than Wall Street anticipated.
The S&P 500 gained 0.46%, while the Dow Jones Industrial Average barely budged, slipping 0.05%.
The inflation number that moved markets
June CPI fell 0.4% month-over-month, landing below consensus expectations.
The Nasdaq Composite traded around the 26,011 level during the session. When inflation cools, the math on future cash flows for tech companies gets more attractive, because discount rates drop. Historically, cooling inflation prints have disproportionately benefited the Nasdaq relative to the Dow, because the Dow is weighted toward industrials and financials that are less sensitive to rate expectations.
Banks delivered, geopolitics threatened
JPMorgan reported Q2 earnings that beat expectations, delivering a higher-than-anticipated profit.
Ongoing US-Iran tensions provided a counterweight, but on Monday the bulls won the tug-of-war.
What this means for crypto and risk assets
Bitcoin and major altcoins have spent recent months trading with increasing correlation to the Nasdaq, particularly around macro events. When the Fed signals it might ease, the dollar typically weakens and liquidity expectations improve, dynamics that are historically bullish for crypto.
For Bitcoin specifically, the 2024 halving cycle dynamics are still in play, and accommodative monetary policy would only add fuel.
US-Iran tensions have already introduced volatility into oil markets, and energy price spikes could reverse the inflation progress that got markets excited on Monday.