Tesla, Palantir Fall as CPI Sends September Fed Hike Odds to 33%
Key takeaways
- The July inflation report eased fears of a September Fed rate hike, with odds falling to 33%, and had a muted impact on tech stocks, particularly Tesla and Palantir.
- Core CPI rose 0.2%
- Headline CPI rose 0.1%
- Annual inflation at 2.5%
What happened
The July inflation report showed core CPI rose 0.2% and headline CPI rose 0.1%, with annual inflation at 2.5% and 3.4% respectively. This eased fears of a September Fed rate hike, with odds falling to 33% on Polymarket and 38% on CME FedWatch. Tesla and Palantir fell 2% and 1.3% respectively, while software stocks broadly lagged as investors rotated back into AI hardware.
Why it matters
The inflation report's impact on Fed rate hike odds and its effect on tech stocks, particularly software and AI hardware, are crucial for investors and traders. The report's benign outcome may have contributed to the muted reaction in Tesla's stock, which normally benefits from a friendlier rate backdrop.
Short-term and longer-term
Short-term. Tesla's stock is simply failing to benefit from a macro development that would normally support rate-sensitive growth names.
Longer-term. Over the next few months, ask whether this changed growth, prices, or the path of interest rates.