As traders count down to Tuesday morning’s CPI release, the July 2025 inflation report is shaping up to be a pivotal market event. The Bureau of Labor Statistics will publish the data at 8:30 a.m. Eastern Time, with consensus calling for headline CPI to rise 2.8% year-over-year (+0.2% MoM) and core CPI to increase 3.0–3.1% (+0.3% MoM). My forecast sits right on those numbers—meaning the real market story will hinge less on direction of the data and more on how it matches, beats, or misses expectations.
The Nasdaq Composite has already shown the sensitivity of tech-heavy equities to macro uncertainty. On Monday, it slipped from midday highs as traders shifted defensive ahead of the CPI, despite a 90-day U.S. tariff extension on Chinese goods that initially lifted sentiment. Adding to the pressure was renewed scrutiny on semiconductor giants like Nvidia and AMD, following reports of a deal to surrender 15% of their China-related AI chip revenue to secure export licenses.
Looking at historical CPI-day behavior, the data show that an “in-line” print rarely produces outsized directional moves, but it often leans slightly positive. On average, the Nasdaq-100 sees a larger-than-normal absolute change—volatility is higher—but the sign of the move tends to follow the market’s base probability: a little better than a coin toss for an up day. For CPI releases that align with consensus, the pattern is usually an early pop, some mid-morning giveback, and a steadier rise into the afternoon.
This sets up three scenarios for Tuesday. If CPI lands almost exactly as forecast, the probability of the Nasdaq closing higher is around 58%, with gains likely to be moderate. A softer reading—core CPI at 0.2% MoM or below 3.0% YoY—would boost those odds to about 70%, thanks to higher Fed rate-cut expectations. But a hotter print—0.4% MoM or core above 3.1% YoY—could drag the odds below 40%, as higher yields and tighter policy expectations weigh on valuations.
CPI days are less about gentle drift and more about intraday whiplash. Even if the final numbers meet forecasts, expect a volatile session as markets digest the implications for Federal Reserve policy, bond yields, and tech-sector multiples. By the close, we’ll know whether the Nasdaq can extend its rally into late summer—or if inflation will once again take the air out of risk appetite.