Nasdaq 100: ON Semiconductor, Microchip Technology Lead Rally on CPI Data

Nasdaq Hits Fresh High as CPI Data Fuels Fed Rate Cut Bets

U.S. stocks traded higher late Tuesday morning after July’s consumer price index (CPI) came in softer than expected, boosting expectations that the Federal Reserve could lower interest rates next month.

Shortly before the mid-session, the Dow Jones Industrial Average was up 474 points, or 1.1%, the S&P 500 gained 0.8%, and the Nasdaq Composite also rose 0.8%, reaching a fresh intraday high earlier in the day.

Did July’s CPI Give the Fed the All-Clear?

Headline CPI rose 2.7% year over year, just below the 2.8% forecast, while core CPI, excluding food and energy, increased 3.1% versus an expected 3%. On a monthly basis, CPI rose 0.2% and core CPI 0.3%, both in line with forecasts. The data pushed the probability of a September rate cut to nearly 91%, up from 85% before the release, according to CME’s FedWatch Tool. Traders also increased bets for additional cuts later this year.

UBS expects inflation to persist but still sees scope for a total of 100 basis points in rate reductions by year-end, starting in September. Strategists point to a favorable mix of easing rates and improving earnings as a strong backdrop for equities.

Which Sectors Are Driving Gains?

Small caps led the advance, with the Russell 2000 up nearly triple the S&P 500’s percentage gain. Financials (+1.25%), energy (+1.13%), and communication services (+1.46%) were the top-performing sectors, while real estate and utilities traded lower. Technology shares also pushed higher, lifting the Nasdaq’s climb.

Tech and Chipmakers Dominate Nasdaq Leaders

ON Semiconductor surged 8.58%, Microchip Technology gained 8.53%, and NXP Semiconductors advanced 6.15%, all benefiting from a softer rate outlook and robust chip demand trends. Texas Instruments and Analog Devices each climbed more than 4%, while Qualcomm added 3.35%. The strength in semiconductors helped offset softness in defensive technology names.

Notable Stock Movers Beyond Tech

Circle Internet Group jumped 12% after reporting a 53% year-over-year revenue increase for the second quarter, making it one of the morning’s top gainers. Old Dominion Freight Line rose nearly 4% on improved freight volume data, while Warner Bros. Discovery advanced 3.2%. On the downside, some income-oriented names in utilities and real estate saw modest selling pressure.

How Are Bonds and Trade Policy Shaping the Outlook?

Treasury yields edged higher despite the rate-cut-friendly CPI report. The 10-year yield rose 4.3 basis points to 4.316%, and the 30-year yield gained 6 basis points to 4.901%. On the trade front, U.S.–China tensions eased slightly after President Trump extended a 90-day pause on higher tariffs, with both sides aiming for further talks.

What’s Next for Markets?

Traders will watch Thursday’s producer price index for another inflation read and monitor headlines from the Jackson Hole symposium later this month. With rate cut expectations strengthening and earnings momentum steady, near-term sentiment for risk assets remains constructive, though Treasury market moves hint that inflation concerns have not fully faded.

More Information in our Economic Calendar.