Price Cut. A softer inflation report that was in line with expectations helped boost stocks today, but overall, it was another fairly uneventful session after a quiet start to the week.

The tech-heavy Nasdaq Composite finished up 0.5% today. The S&P 500 rose 0.3%, closing just short of its recent record of 7757.64. But the Dow Jones Industrial Average was down 22 points, essentially flat.

Outside of the cooler inflation reading this morning, artificial intelligence stocks like Super Micro Computer and Lumentum helped drive stocks higher today, particularly in the Nasdaq, after turning in earnings performances that smashed expectations.

My colleague Reshma Kapadia spoke with Inigo Fraser Jenkins, who says the days of a “no-brainer” way to diversify stock portfolios with the help of 10-year U.S. Treasuries is over. And, sadly, the alternatives aren’t as great.

“I don’t think anything replaces the no-brainer position of long-duration, nominal bonds. For decades, they provided a really liquid asset class that apparently had low volatility, negative correlations to equities and positive real returns,” Fraser Jenkins said.

He points to base metals and energy as having more of a diversification role in portfolios these days, as well as infrastructure and private credit.

Read Reshma’s full interview here.

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The Hot Stock: Super Micro Computer +19.0%
The Biggest Loser: Texas Pacific Land Corporation -6.1%

Best Sector: Real Estate +1.1%
Worst Sector: Consumer Discretionary -1.4%

July provided another month of cooler inflation, but not enough to sound the all clear on the Federal Reserve hiking interest rates in September.

Policymakers will get a couple more inflation reports between now and the next Federal Open Market Committee meeting, which should help firm up where policy is heading.

“Today’s CPI print, alongside July’s drop in payrolls, should lower expectations for a September hike, but does not put it completely to bed,” writes Seema Shah, chief global strategist for Principal Asset Management. “Unless August’s inflation print also shows subdued price pressures, a September hike is a clear risk.”

Inflation trended lower last month due to an expected pullback in gasoline prices and another fairly benign reading on housing inflation. Headline CPI rose just 0.1% on the month in July, resulting in annual inflation slowing to 3.4% from June’s 3.5% pace. In fact, food and energy inflation posted the lowest year-over-year readings since March.

Core inflation rose 0.2% month over month in July, translating into an annual increase of 2.5%. That too was a bit of a deceleration from June’s 2.6% pace.

But with the Strait of Hormuz still shut and no new permanent peace deal in place with Iran, the risk of elevated inflation remains high.

Fed officials have also cited concerns about the broadening of inflationary pressures across goods and services, and July provided little relief on that front. Prices for both goods and services advanced last month, and several categories, including medical services, used vehicles, computer software and accessories, and apparel, showed notable gains.

Fed officials are waiting on two key reports to chart a more certain future when it comes to interest rates: July personal consumption expenditures (PCE) price index on Aug. 26, and the August CPI data release on Sept. 11. That latter will be released just a few days before the FOMC’s Sept. 15-16 meeting.

Applied Materials, Brookfield, Tapestry, and Yeti Holdings announce quarterly results tomorrow.

The BLS will release the producer price index for July. The consensus call is for a 4.9% jump from a year earlier, while the core PPI is seen rising 4.2%, according to FactSet. This compares with increases of 5.5% and 4.7%, respectively, in June.

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