Could the CPI release alter the trajectory of US stock gains?

Apple’s investment fuels tech rally driving US market upward

United States (US) stock markets surged on Friday night, with technology stocks extending their gains following Apple's announcement of a $600 billion  investment plan. For the week, the US Tech 100 (Nasdaq 100) rose 3.73%, the US 500 (S&P 500) gained 2.43%, and the Wall Street (Dow Jones) added 587 points (1.35%).

Last week’s rally was further supported by:

• Strong corporate earnings
• Reports of a potential Russia-Ukraine ceasefire
• Stephen Miran’s appointment to the Federal Reserve (Fed) Board. Miran's appointment comes amid reports that Fed Governor Christopher Waller is President Trump’s top candidate to replace current Fed Chair Jerome Powell.

Upcoming Fed speeches and expectations

Waller has maintained a dovish stance throughout 2025, which aligns with Trump’s preference for lower interest rates. While it remains uncertain whether Miran's appointment will take effect before the September Federal Open Market Committee (FOMC) meeting, last week’s shift in Fed tone was evident, as several officials expressed concerns about growth following the July employment report.

This will also be in mind when Fed Reserve voter Michelle Bowman speaks this week for the first time since her dissent explanation published on 1 August, which outlined her reasons for voting for a rate cut at last month’s FOMC meeting. Bowman argued that inflation is moving closer to the target, excluding temporary tariff effects.

This week's focus

Looking ahead, the market largely is expecting the US-China trade truce set to expire on Tuesday to be extended for another 90 days. As earnings season winds down, Tuesday night’s consumer price index (CPI) report, highlighted below, will be the key focus this week.

US CPI preview

Date: Tuesday, 12 August at 10.30pm AEST

For June, the annual rate of headline inflation in the US rose to 2.7% from 2.4%, marking its highest level since February. The annual core inflation rate increased slightly to 2.9% from 2.8%, just below market expectations of 3%. For July, the expectation is for the annual headline inflation rate to climb to 2.8%, with the core measure edging higher to 3%, as the inflationary impact of tariffs can again be observed.

A hotter-than-expected CPI could raise fears of stagflation and weigh on risk sentiment, potentially hurting US stock markets. Conversely, if inflation comes in below expectations, it could boost hopes that the Fed will cut rates sooner and more aggressively, providing a boost for stocks.

Despite an expected rise in inflation, the US interest rate market is almost fully priced for a 25 basis point (bp) cut at the September FOMC meeting after July’s soft US non-farm payrolls (NFP) jobs report. There is a total of 57 bp of Fed rate cuts priced between now and the end of the year.

US core CPI chart

Nasdaq 100 technical analysis

Since the Nasdaq 100’s surge higher on 12 May, we have been working with the view that the rally from the 21 April low of 17,592 is a Wave III (Elliott Wave Theory). Once the Wave III is complete, it should be followed by a Wave IV correction.

The signs of upside rejection from the weekly trend channel viewed two weeks ago, which we thought could signal the start of Wave IV, have been negated by last week’s rally which took the Nasdaq to new highs.

We start this week waiting to see if the Nasdaq 100 can see a sustained break above weekly trend channel resistance or if the weekly trend channel resistance, viewed at around 23,700 on the chart below, will stall the Nasdaq’s advance, potentially setting up the long-overdue Wave IV pullback.

Nasdaq 100 daily chart

S&P 500 technical analysis

We have been working with the view that the rally from the 21 April 5101 low was a Wave III (Elliott Wave) that should be followed by a Wave IV pullback.

With the Nasdaq 100 again testing significant trend channel resistance viewed on the chart above, we remain open-minded about whether the level will provide the platform for a retracement or a break higher.

Returning to the S&P 500, a sustained break of short-term support at 6200 - 6180 would greatly increase the chances that a Wave III is complete at the recent 6427 high and that a Wave IV pullback is underway.

The initial target for the Wave IV pullback is a band of support in the 6150 - 6130 area coming from previous highs. A sustained break of this support level would then open the way for a deeper Wave IV decline towards support at around 5970 - 5950.

Aware that if the Nasdaq 100 breaks above weekly trend channel resistance, it opens the way for the S&P 500 to move higher towards around 6550.

S&P 500 daily chart

• _{Source: TradingView. The figures stated are as of 11 August 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}