Wall Street’s record-setting calm will get its next test on Tuesday, when the Labor Department posts June consumer-price data and investors learn whether President Donald Trump’s latest tariff barrage is finally showing up in household budgets.

Expectations: A Small Bite

Economists surveyed by The Wall Street Journal expect headline CPI to rise 0.3 % in June, pushing the 12-month rate to 2.7 % from May’s 2.4 %. Core CPI, which strips out food and energy, is also projected to climb 0.3 % on the month and 3.0 % year-on-year.

Those numbers would reflect the first full month of post-“Liberation Day” duties, yet strategists say markets appear conditioned to view any pop in goods prices as a one-off.

“Investors have grown less inclined to worry about inflation,” said Thierry Wizman, global FX and rates strategist at Macquarie. “Unless services costs re-accelerate, the market will likely shrug off a tariff-driven bump in core goods.”

Services—nearly 60 % of CPI—have been easing. A renewed surge there, Wizman warned, would raise fears of sticky inflation and give the Federal Reserve cover to delay rate cuts now pencilled in for the fourth quarter.

Earnings Season: Tariff Clues Inside the Numbers

The inflation print lands just as the second-quarter reporting season begins. JPMorgan Chase, Wells Fargo, Citigroup and BlackRock open the books Tuesday; Bank of America, Goldman Sachs and Morgan Stanley follow on Wednesday.

FactSet’s blended S&P 500 earnings growth estimate sits at 4.8 %, the slowest since 4Q 2023, and early reporters are beating forecasts at a below-average 71 % clip. Corporate commentary will show whether tariff uncertainty merely delayed spending or materially dented demand.

Jim Smigiel, CIO at SEI, says companies’ willingness to offer guidance may be the real tell. Only 16 % of S&P firms issued outlooks last quarter, versus 27 % a year earlier. “If managements regain confidence to guide for the back half of 2025, that alone could buoy the market,” he said.

Market Mood: Records Despite Red-Hot Copper

Tariff headlines have been plentiful—2.4 million tonnes of copper rallied to an all-time high, coffee futures perked up on supply-chain angst, and the White House floated blanket levies on EU and Mexican imports—yet the S&P 500 and Nasdaq both set fresh highs last week. Even Friday’s late-session sell-off after a 35 % duty on Canada trimmed only 0.3 % from the broad index.

Oxford Economics notes that lower oil prices earlier this spring offset some tariff effects, but that benefit is fading. “Inflation in line with forecasts likely keeps the Fed sidelined through summer,” their economists wrote.

Fed Chair Jerome Powell has called the June CPI one of the most critical data points for gauging tariff impact. Futures markets as of Friday priced less than a 5 % chance of a July rate cut, down from 20 % a month ago.

What Could Jolt the Calm?

  • A core-services surprise: A spike in rent, travel or medical costs could signal broader price pressure.
  • Deteriorating bank margins: Big lenders might disclose a squeeze on net-interest income if deposit costs rise faster than loan yields.
  • Guidance dark patch: Another quarter light on outlooks would reinforce fears that tariff uncertainty is chilling corporate planning.

Barring those shocks, strategists say the equity rally may continue to treat tariffs as noise rather than a macro game-changer. Tuesday’s CPI will show whether inflation agrees.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

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