Equities Dip Ahead of CPI Data; Oil Rises on Hormuz Tensions

Lead US equities closed lower today, with the S&P 500 ETF down 0.32% and the Nasdaq 100 ETF losing 0.32%. WTI crude oil rose 1.67% amid geopolitical tensions in the Strait of Hormuz, while the US 10-year yield fell 0.32%. Session narrative US equities ended the session in negative territory, with major indices seeing slight declines. The S&P 500 ETF (SPY) fell 0.32%, and the Nasdaq 100 ETF (QQQ) also dropped 0.32%. The Dow ETF (DIA) was down 0.34%. In contrast, the Russell 2000 ETF (IWM) managed a gain of 0.31%. Geopolitical concerns surrounding the Strait of Hormuz continued to impact oil prices, with WTI crude rising 1.67% to $83.50 and Brent crude up 1.70% to $89.21. This rise in oil prices, combined with ongoing tensions, contributed to market caution ahead of tomorrow's key CPI data. The US 10-year yield saw a decrease of 0.32% to 4.68%, while long-duration Treasuries (TLT) rose 0.16%. The US Dollar Index (DXY) was largely flat, down 0.003%. Gold prices increased by 0.21% to $4429. The VIX, a measure of market volatility, decreased by 1.10%. Cross-asset check Equity futures largely mirrored the cash market, with S&P 500 futures down 0.32% and Nasdaq futures down 0.36%. Russell futures, however, gained 0.38%. In currencies, USD/JPY saw a slight increase of 0.04% to 159.277, while EUR/USD was flat at 1.1546. Commodities were mixed; while crude oil surged, natural gas fell 1.43%. Silver declined 0.58%, but copper gained 0.15%. Themes & continuing stories Geopolitical tensions in the Middle East remain a dominant theme, particularly with Iran's statement regarding the closure of the Hormuz Strait and Yemen targeting a Saudi ship. US energy officials have raised their oil price forecast, anticipating persistent disruptions in the Strait of Hormuz through August. This ongoing situation is directly impacting crude oil prices and contributing to broader market uncertainty. Inflation concerns are also at the forefront, with markets keenly awaiting the July CPI report tomorrow. Several reports highlighted the importance of this data for Fed officials looking for evidence of inflation returning to 2%. Additionally, the war in Ukraine continues, with President Zelenskiy submitting peace plan proposals to US negotiators. What’s ahead The primary focus for tomorrow will be the release of the US CPI report for July at 8:30 am ET. This data is expected to be closely watched by traders and Fed officials for indications on inflation trends. The economic calendar for Wednesday, August 12, also includes scheduled Fed speeches. Market participants will be analyzing these events for potential impacts on interest rate expectations and overall market direction.