Here's why the cooler consumer inflation we wanted flipped the stock market on its head

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The data bolstered the case for Fed interest rate cuts but also gave investors the green light to rotate out of this year's tech winners.

We finally got the consumer price index we were looking for, with both the June headline and core readings coming in slightly lower than expectations. The CPI bolstered the case for the Federal Reserve to start cutting interest rates. It also gave investors the green light to rotate out of this year's tech winners and into rate-sensitive stocks. Headline CPI dipped 0.1% from May, the first monthly decline since May 2020.

Jim said he thinks the Fed should stick to its guns and cut only once before the end of the year because companies have been reluctant to lower their prices; other than Walmart and Club name Costco . Jim talked about how PepsiCo 's reluctance to reduce prices led to mixed quarterly results and narrowed full-year revenue guidance. That's reflected in the food and beverage component for the CPI, which saw monthly increases in May of 0.1% and June of 0.2% after a flat April.

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