US Inflation Meets Expectations: Wall Street Sheds Fed Weight and Rallies

US inflation data for July aligning perfectly with market expectations has triggered risk appetite in the New York stock market, while significantly eliminating uncertainty regarding the Federal Reserve's (Fed) monetary policy steps in the coming months. Investors, emboldened by the data reinforcing the "soft landing" scenario, turned to buying led by technology stocks, resulting in a positive opening across the indices.

Consumer Prices and the Fed's Future

According to data from the US Department of Labor, the Consumer Price Index (CPI) rose by %0.1 on a monthly basis and %3.4 on an annual basis in July. Core CPI, excluding volatile energy and food prices, also met expectations with a monthly increase of %0.2 and an annual increase of %2.5. In light of this data, market pricing strengthened regarding the Fed keeping interest rates steady in the September meeting.

■Following last week's weak employment data, this inflation report eased the burden on policymakers.

■The fact that another inflation data will be released before the critical September meeting indicates that volatility has not completely disappeared.

■The Producer Price Index (PPI) to be announced tomorrow will be an important indicator confirming the reflection of inflation on the production side, closely watched by investors.

Tech-Led Rally in Indices

Wall Street, which followed a positive trajectory at the opening following the data, saw indices trading near record levels. The rally led by technology stocks brought AI-themed companies to the forefront.

■The Dow Jones index rose to 53,797.47 points with a %0.01 increase.

■The S&P 500 index reached 7,765.46 points, gaining %0.48.

■The technology-heavy Nasdaq index climbed to 26,680.46 points with a %0.89 rise.

AI Wave Gains Momentum in Earnings Season

Corporate financial results continue to prove the sustainability of demand for artificial intelligence (AI) infrastructure. This situation directly supports the stock performance of technology giants.

■Cloud computing company CoreWeave achieved a value increase of over %20 in its shares after its second-quarter revenue doubled compared to last year.

■Super Micro Computer experienced a rise of over %10 in its shares following financial results that exceeded expectations.

Geopolitical Risks on the Radar

Despite the soothing effect of economic data, developments in the Middle East remain a risk factor for market participants. The potential reflection of regional conflicts on energy prices remains a factor that could disrupt the inflation outlook again. While diplomatic initiatives between the US and Iran and discussions on extending the ceasefire somewhat ease uncertainty over oil prices, the geopolitical premium maintains its pressure on assets.

The reactivation of the "Risk-On" mode we track in our algo-trading models in US indices could open a limited door for BIST 100 as well. However, for the continuity of foreign inflows in the index, which is in the conversion zone of the Ichimoku Cloud, the permanence of US inflation at the %3.4 level is critical. In the short term, we will test the reflection of the volatility in Nasdaq on our technology-weighted index, supported by volume above the 10,000 point psychological resistance of XU100.