US equities trim losses after initial dip on cooler CPI report

Wednesday’s July CPI report shows that prices are definitely falling, but markets are still questioning whether the Federal Reserve can achieve a soft landing

article-image

Adam Neil Hutchinson/Shutterstock modified by Blockworks

share

Prices in the US rose slightly less than anticipated in July, the latest Consumer Price Index report shows. 

The annual rate of inflation is now below 3% for the first time in more than three years. 

Consumer prices increased by 2.9% in the 12 months ending in July, according to the Bureau of Labor Statistics. Analysts had expected a 3% year-over-year increase. Month over month, prices rose 0.2% in July after declining 0.1% in June. 

Odds of a 25 basis point interest rate cut in September from the Federal Reserve jumped to 56% following the release of Wednesday’s report, according to Fed fund futures data from CME Group. On Tuesday, markets were calling for a 47% chance of a cut at the next meeting. 

BTC and ETH initially dropped on the news. Bitcoin lost as much as 4% in the two hours after the CPI report was published while ether slid close to 5%, according to data from Coinbase. 

Even so, Eliézer Ndinga, vice president and head of strategy and business development of digital assets at 21Shares, said interest rate cuts in the fall will help to shift investor sentiment back to risk-on. 

“We expect this to benefit the crypto industry in the long run, particularly if inflationary pressures are maintained in the short-term, which could result in further rate cuts this year,” Ndinga added. “Rate cuts generally lead to more liquidity in the markets, thereby encouraging investors to seek higher returns in risk-on assets, like bitcoin and ethereum.” 

US equities also stumbled at the open before paring losses later in the trading session. The S&P 500 slid as much as 0.5% in the first hour of trading before rallying. The index is now up 0.3% over the session as of 11:30 am ET. 

Similarly, the tech-heavy Nasdaq Composite lost more than 1% in the first hour after the open but was trading flat at time of publication. 

While a hotter inflation print likely would have pushed stocks and risk assets much lower, investors now are left wondering why inflation appears to be cooling, according to Sevens Report Research founder Tom Essaye. If prices are only coming down because economic growth is cooling, markets will not react well in the long term. 

“The bigger question is whether inflation is falling because growth is  stalling,” said Essaye. “If that is true, then falling inflation will turn from  a tailwind to a headwind in the coming months and  you’ll likely hear a term from the past: deflation.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (3).png

Research

Pear Protocol has proven its market fit through its pair-trading infrastructure, sustaining consistent trading activity despite recent headwinds. Its strategic pivot toward Hyperliquid integration represents a major growth catalyst amid industry consolidation. While short-term token unlocks present challenges, current valuations and liquidity conditions may offer compelling opportunities for investors.

article-image

The House embraces crypto — but keeps the fences up

article-image

The network got slower in June — and it wasn’t for tech-related reasons

article-image

After a jittery few months, recent economic data is hinting at a resilient economy that is beginning to re-accelerate

article-image

The stablecoin bill now heads to the president’s desk

article-image

The House on Thursday passed the CLARITY Act, a landmark cryptocurrency market structure bill

article-image

Interchain Labs will focus on sovereign L1s and institutional demand, abandoning plans for smart contracts on the Cosmos Hub