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Equities Rip to New Highs with September Rate Cut In Sight
RiskReversal Recap: Tuesday, August 12th
RiskReversal Media
August 12, 2025
MARKET WRAP
Stocks broke out to new highs after a slightly cooler-than-expected CPI print all but solidified a September rate cut, with odds now above 90%. Thursday’s PPI is the next hurdle but volatility expectations for that number have dropped precipitously following today’s. Small caps in particular loved the new rate cut odds. On the day: SPX +1.1%, QQQ +1.3% IWM +3.0%
Outside of equities, one thing to note was the reaction in yields with short duration to 2 year yields falling, while the 10YY and further actually rose slightly. The 10YY finished the day at 4.29%. Gold fell slightly, the dollar did as well. Oil was lower by -1.2%. The VIX got slammed, now 14.75.
Notable Gainers: UAL +10%, DAL +9%, INTC +5%, ON +6.5%, GS +3.2%, UNH +3.3%, BA +2.5%
Notable Losers: IBM -1%, MCD -1%, CAH -7%
After hours: CRWV is down about -8% (early) on earnings.
MRKT Call: Guy and Dan on today’s CPI and the reaction in equities (and yields). A look at some stocks that haven’t performed well in this rally and could be due for a bounce. Coverage of Perplexity/Chrome news, plus your questions.
RiskReversal Pod: Liz joins Guy to preview the CPI and PPI data, the Fed’s next moves and the pressures on economic data integrity given recent news. Then, earnings season, insider sales and buybacks. Plus thoughts on undervalued sectors like healthcare and energy.
MRKT MATRIX: TODAY’S TOP STORIES
S&P 500 hits new record as CPI report gives Fed green light to cut rates (CNBC)
Inflation Held Steady at 2.7% in July (WSJ)
The Era of Big Raises for Low-Paid Workers Is Over (WSJ)
Trump to Nominate Bureau of Labor Statistics Critic to Lead Agency (WSJ)
Perplexity Makes Longshot $34.5 Billion Offer for Chrome (WSJ)
Musk threatens ‘immediate’ legal action against Apple over alleged antitrust violations (CNBC)
China Urges Firms to Avoid Nvidia H20 Chips After Trump Ends Ban (Bloomberg)
WHAT’S NEXT?
Today’s data pretty much solidified a September rate cut. That prospect had wavered over the past two weeks, especially after Powell’s post-FOMC press conference briefly dragged September cut odds below 50%. Now, the odds are north of 90%. As we noted going into this week: “A couple of cooler CPI and PPI prints could give the market the spark it needs for a breakout”
As for the upcoming PPI, volatility got slammed today, with the VIX now below 15 and at its lowest levels since April’s tariff tantrum. That backdrop is supportive of the breakout continuing—so long as Thursday’s PPI doesn’t shock. From the looks of short duration volatility, equity traders got all they needed to know from today’s CPI. Beyond the PPI, the next likely catalysts for volatility are stacked at the end of August, when Fed Chair Powell speaks at Jackson Hole and Nvidia reports.
Tomorrow is pretty quiet on the economic data front but we do get some Fed Speak, plus CSCO earnings after the close:
Wednesday, August 12th
1pm - Fed Goolsbee speech
1:30pm - Fed Bostic speech
After-hours: CSCO 4.8%
SPX expected move: 0.4% (half today’s 0.8% expected move)
TODAY’S EPISODES
Watch MRKT Call’s newest episode:
Discussing today’s CPI number and the reaction in equities (and yields). A look at some stocks that haven’t performed well in this rally and could bounce. Coverage of Perplexity/Chrome news, plus your questions.
Analysis - SPX, TLT, US10YY, VIX, LUV, UAL, CRM, RH, VKTX, LLY,
Live Robinhood Trade - Buying a CRM Call Spread
Your Questions:
Ted Hoffman - Q for Guy: VKTX - you said last year there was lots of potential, but you’d probably have to deal with pain along the way. We’ve bounced off about $27 meaningfully; what now?
Jack CF - Has CMG finally found a bottom after their earnings report?
Learn more about our sponsor, Robinhood.
Watch RiskReversal Podcast’s newest episode:
Liz Thomas of SoFi joins Guy on the podcast to preview the CPI and PPI data, the Fed’s next moves and the pressures on economic data integrity given recent news. Then, earnings season, insider sales and buybacks. Plus thoughts on undervalued sectors like healthcare and energy.
Learn more about our sponsor Robinhood.
