S&P 500 Moves Higher After More Encouraging Inflation Data: Live 13 August 2026

 

S&P 500 Moves Higher After More Encouraging Inflation Data: Live 13 August 2026

## Introduction: The Inflation Headache That Wasn't

There's a moment in every investor's life when you hold your breath waiting for a number. And for the better part of the last year, that number has been inflation.

On August 13, 2026, investors finally got some relief. Not because inflation is solved—far from it. But because the data gave them exactly what they needed: a reason to believe the Federal Reserve might not hike rates again in September.

The July Consumer Price Index came in right where economists expected: 3.4% year-over-year, down slightly from 3.5% in June . Core inflation, which strips out volatile food and energy prices, cooled to 2.5% annually—its slowest pace since March 2021 .

And on Thursday, the Producer Price Index delivered a second helping of good news. Wholesale inflation cooled to 4.7% year-over-year in July, down from 5.5% in June and below the 4.9% forecast . On a monthly basis, PPI was flat, defying expectations for a 0.2% increase .

For a market that had been bracing for the worst, this was music to its ears.

The S&P 500 climbed 0.26% to 7,748.50, while the Nasdaq Composite added 0.54% to 26,588.49 . The Dow Jones lagged slightly, slipping 22 points to 53,770.27 . Not a blowout rally, but a steady, confident advance—the kind that suggests investors are finally exhaling.

But before you pop the champagne, let's be clear about what this data actually means, what it doesn't mean, and why the market's calm might be more fragile than it appears.

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## The Numbers: What the Data Actually Says

### CPI: The One We Were All Watching

Wednesday's CPI report was the main event, and it delivered exactly what the market hoped for:

- **Headline CPI:** 0.1% month-over-month, 3.4% year-over-year (in line with expectations, down from 3.5% in June) 

- **Core CPI:** 0.2% month-over-month, 2.5% year-over-year (the softest annual core reading in five months) 

The gas pump deserves some credit here. Falling gasoline prices for the second consecutive month helped keep the headline number in check . But core inflation's cooling was the real story—it suggests that underlying price pressures are easing, even if energy costs remain volatile.

For the Federal Reserve, the message was clear: inflation is not re-accelerating. As Chris Zaccarelli at Northlight Asset Management put it: "The big surprise with a report that had no surprises is that a situation where inflation isn't reaccelerating, coupled with the most recent, weak jobs report gives the Fed more time to wait" .

### PPI: The Double Confirm

Thursday's Producer Price Index offered a second layer of reassurance. Wholesale inflation came in cooler than expected:

- **Headline PPI:** 4.7% year-over-year (down from 5.5% in June, below 4.9% forecast) 

- **Monthly PPI:** Flat (defying expectations for a 0.2% increase) 

- **Core PPI:** 0.2% monthly (slightly below the 0.3% expected) 

PPI matters because it captures inflation before it reaches consumers. If wholesale prices are cooling, that should eventually translate to lower prices at the store.

"Thursday's PPI release is the next checkpoint—it will offer a clearer read on how these pressures are flowing into core PCE, the Fed's preferred gauge," analysts noted .

### The Fed Implications

The market's reaction was immediate and logical: rate hike expectations cooled. Money markets now price in roughly a **40% probability** of a 25-basis-point rate hike in September, down from 55% just a week ago .

But this is not a victory lap for doves. Seema Shah at Principal Asset Management put it plainly: "Today's CPI print, alongside July's drop in payrolls, should lower expectations for a September hike, but does not put it completely to bed. Unless August's inflation print also shows subdued price pressures, a September hike is a clear risk" .

The Fed's next meeting is in September. Between now and then, we'll get another CPI report—and with oil prices still elevated, there's no guarantee the good news continues.

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## The Market's Response: A Quiet Celebration

### What Actually Moved

The S&P 500's 0.26% gain on Wednesday doesn't sound like much. But context is everything. The index is hovering near all-time highs, having recovered from the July low of 7,470 and now consolidating above 7,750 .

Technically, the S&P 500 is testing resistance at the fresh record high of 7,790. If buyers can extend gains above that level, 7,900 and 8,000 come into focus .

### Tech Leads the Charge

Not all sectors are created equal. Information technology, real estate, and utilities stocks recorded the biggest gains on Wednesday . Consumer discretionary and materials stocks bucked the trend, closing lower .

But the real story was AI. As the Econoday report noted: "With the overhang of the CPI report out of the way, many traders went back to focusing on the AI momentum trade, which outperformed the market, paced by chipmakers and other AI shares" .

This is a pattern we've seen before. Inflation data is important, but the market's true love remains the AI narrative—and it's hard to argue with the numbers.

### The Earnings Tailwind

Behind the inflation headlines, there's a more fundamental force driving markets: corporate profits. The June quarter earnings season was spectacular. S&P 500 earnings per share surged 46.7% year-over-year, building on a 19% climb in the March quarter .

Even excluding specific investment gains, earnings still rose an impressive 25.7%. Consensus forecasts now project calendar 2026 earnings growth at a staggering 32.6% .

Veteran market strategist Ed Yardeni called this earnings picture "unprecedented" and raised his year-end S&P 500 target to 8,400 points . That's nearly 10% above current levels.

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## The Skeptic's View: What Could Go Wrong

### Oil: The Elephant in the Room

Here's the problem that won't go away: oil.

Brent crude surged 5% on Monday after hopes for a quick diplomatic breakthrough with Iran faded . While oil eased slightly on Thursday—Brent fell to $88.35 per barrel, down about 2% —it's still far above pre-war levels.

The Strait of Hormuz, through which roughly a fifth of global oil supply flows, remains closed. And until it reopens, upside inflation risks will remain "top of mind for the foreseeable future" .

The 20% jump in oil prices in July means that inflation could be rekindled in the coming months . As one analyst put it: "Upside inflation risks will remain top of mind for the foreseeable future" .

### The AI Sustainability Question

The AI boom is driving markets, but not everyone is convinced it's sustainable. Torsten Slok, chief economist at Apollo Global Management, raised a pointed question: AI chipmakers enjoy "substantial margins while AI model developers operate at a significant loss" .

In other words, investors are funding upstream profits, not paying customers. The question of AI ROI "now overshadows future interest rate debates" .

### The Fed's Dilemma

The Fed is walking a tightrope. As Goldman Sachs Asset Management's Lindsay Rosner noted: "Contained core inflation adds to the encouraging signs in last month's release of a moderation in underlying inflation, helping strengthen the case for a September hold" .

But Ellen Zentner at Morgan Stanley Wealth Management added a caveat: "While there will be another round of inflation data before the September Fed meeting, unless those numbers tell a much different story, officials will likely still be in a position to leave rates unchanged" .

The key phrase: "unless those numbers tell a much different story." With oil prices elevated and geopolitical tensions unresolved, that's a big "unless."

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## What to Watch Next

### Friday's Retail Sales Report

The next major data point is Friday's July retail sales report. Economists expect a modest 0.1% increase . That would signal that consumers, who have been the engine of the economy, are finally pulling back.

A weak retail sales report would reinforce the case for a September hold. A strong one might give the Fed more room to hike.

### August CPI: The Real Test

The September Fed decision will be heavily influenced by one data point: the August CPI report. If it shows inflation continuing to cool, a September hold is almost certain. If oil prices push it higher, all bets are off.

### The Middle East Wildcard

The Iran situation remains unresolved. As one analyst noted in the IC Markets report, "renewed tensions in the Middle East continued to weigh on sentiment" . A breakthrough could send oil prices tumbling and stocks soaring. An escalation could do the opposite.

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## Frequently Asked Questions

### 1. What were the key inflation numbers on August 13, 2026?

The July CPI showed 0.1% month-over-month and 3.4% year-over-year, in line with expectations and slightly lower than June's 3.5%. Core CPI rose 0.2% monthly and 2.5% annually—the softest core reading in five months . The PPI report on Thursday showed wholesale inflation cooling to 4.7% year-over-year, below expectations .

### 2. How did the S&P 500 perform on August 13, 2026?

The S&P 500 rose 0.26% to 7,748.50 on Wednesday, following the CPI report . The Nasdaq Composite climbed 0.54% to 26,588.49, while the Dow Jones slipped 0.04% to 53,770.27 .

### 3. What does the inflation data mean for Federal Reserve rate hikes?

The data cooled expectations for a September rate hike. Money markets now price in a 40% probability of a 25-basis-point hike, down from 55% a week ago . However, a September hike is still a "clear risk" if August inflation shows renewed price pressures .

### 4. Why is the market not more excited about good inflation news?

Several factors are keeping enthusiasm in check. Oil prices remain elevated due to the closed Strait of Hormuz, which could rekindle inflation . Also, the AI-driven earnings rally has already priced in much of the good news, leaving less room for upside surprises .

### 5. What is the "AI sustainability" concern mentioned by analysts?

Apollo Global Management's Torsten Slok notes that AI chipmakers enjoy substantial margins while AI model developers operate at significant losses. This suggests investors are funding upstream profits, not paying customers—raising questions about whether the AI spending boom is sustainable .

### 6. When is the next key data point for markets?

Friday's July retail sales report is expected to show a modest 0.1% increase . More importantly, the August CPI report, due before the September Fed meeting, will be the decisive factor in whether the Fed hikes or holds rates.

### 7. Is the market still in a "melt-up" phase?

Strategist Ed Yardeni has raised his year-end S&P 500 target to 8,400, citing unprecedented earnings growth . The index has added almost 6% in recent weeks . However, the sustainability of the AI-driven rally remains an open question.

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## Conclusion: The Calm That Could Be the Eye of the Storm

August 13, 2026, was a good day for the markets. The inflation data was reassuring, rate hike expectations cooled, and the S&P 500 hovered near record highs. For investors who have been on edge since the Iran war sent oil prices soaring and inflation fears spiking, this was a welcome respite.

But "good" is not the same as "safe."

The market's current calm masks real risks. Oil is still near $88 a barrel, and the Strait of Hormuz remains closed . The next CPI report could tell a very different story if energy prices keep climbing. And the AI spending boom, while driving spectacular earnings, may not be sustainable in the long run .

The Fed has breathing room—for now. The data gives officials a reason to hold steady in September. But as Morgan Stanley's Ellen Zentner noted, "unless those numbers tell a much different story" , a hold is likely. That "unless" is doing a lot of work.

For American investors, the message is clear: enjoy the rally, but keep your eyes on the horizon. The inflation story isn't over, geopolitics are unresolved, and the market's valuation is stretched.

History suggests that the best time to prepare for volatility is when volatility is low. And right now, the VIX is hovering near 15.5—close to pre-war levels . That's a sign of confidence, but also complacency.

The next few weeks will be critical. Friday's retail sales report, the August CPI release, and any developments in the Middle East will shape the market's trajectory into the fall.

For now, the S&P 500 is higher, inflation fears are temporarily receding, and investors are breathing easier. But the underlying risks haven't disappeared. They've just been priced in—and as any veteran trader will tell you, when everyone agrees the market is calm, that's often when the storm is closest.

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## Disclaimer

*This article is for informational and educational purposes only and does not constitute financial, investment, tax, or legal advice. All views expressed are based on the analysis of publicly available information, including market data, research reports, and news media. The author does not endorse any specific investment strategies or products mentioned. Investing in financial markets involves significant risk, including the potential loss of principal. Past performance is not indicative of future results. The economic and geopolitical environment discussed is inherently unpredictable, and market conditions can change rapidly. Before making any investment decisions, please consult with a qualified financial advisor who can evaluate your specific situation. The author may hold positions in some of the securities mentioned and has no obligation to disclose changes in such holdings.*