Market Crosscurrents: Inflation Peaks, Gold Surges, and Fed Cut Odds Rise

A graph with arrow pointing to a waveAI-generated content may be incorrect. Global equities ended the week little changed as midweek gains faded into a Friday pullback ahead of the holiday weekend. The S&P 500 briefly pushed past the 6,500 mark for the first time on Thursday, only to dip back below by Friday’s close.

A black line drawing of a graph with iconsAI-generated content may be incorrect. The Fed’s preferred inflation measure, the Core PCE Index, rose to 2.9% year-on-year in July—its highest in five months. Headline inflation, which includes food and energy, came in at a softer 2.6%.

Impact: Persistent inflation above target could keep monetary policy in focus, with markets attentive to how the Fed balances growth and price stability.

Gold rallied for a second consecutive week, touching an all-time high of $3,518/oz in Friday trading—up 31% year-to-date. Much of the move followed the latest inflation release.

Impact: The surge reflects heightened demand for perceived safe-haven assets amid inflation and policy uncertainty.

A black arrow pointing down with a percent signAI-generated content may be incorrect. Bond markets now imply an 89% chance that the Fed will cut rates at its September 17 meeting, according to CME’s FedWatch tool. Investors expect a quarter-point cut, reinforcing the dovish tone in recent commentary.

Impact: Markets appear confident in a policy shift, though the scale and timing remain subject to evolving data and Fed communication.

A person sitting at a desk with money falling from his deskAI-generated content may be incorrect. Q2 earnings season wrapped up with S&P 500 companies posting 11.7% growth versus a year ago. It marked the third straight quarter of double-digit gains, though slightly below Q1’s 12.9%. Communication services led the way with a 46% surge.

Impact: Corporate profits remain solid, suggesting resilience, though momentum cooled slightly compared to earlier quarters.