Two’s a Charm. The S&P 500 notched a new high on Thursday, with investors rallying behind a slightly more benign inflation outlook.

The S&P rose 0.7%, marking its 27th record close of the year. The Dow Jones Industrial Average gained 70 points, or 0.1%, snapping a three-trading day losing streak. The Nasdaq Composite was up 0.8%.

The July readings of both the consumer and producer price indexes helped push stocks higher.

PPI, which was released Thursday and measures wholesale inflation, was unchanged in July from June. Economists were expecting prices to tick up by 0.1% month over month. July’s reading was up 4.7% year over year, but lower than June’s 5.5% pace. Lower fuel prices helped bring inflation down—energy costs declined 3.1% month over month. Brent Crude prices dipped 0.2% on Tuesday and have fallen 18% over the past three months.

Consumer prices also increased at a slower pace in July than they did in June, rising at an annual rate of 3.4% compared to the prior months’ 3.5% pace.

Markets are betting that the weaker inflation data will remove pressure for the Federal Reserve to increase interest rates in September. Odds that the central bank will hold rates steady rose to about 65% on Thursday from 59% Wednesday, according to the CME’s FedWatch Tool.

“The Fed still has an inflation problem, but the recent softness likely strengthens the case for doves on the committee who want to wait things out,” says Sonu Varghese, chief macro strategist at Carson Group. “We’re still in the camp that there won’t be rate hikes this year, which means we’ll continue to see the economy (and markets) run hot.”

And markets were indeed running hot on Thursday. Most S&P 500 stocks and sectors rose—only industrials, healthcare, energy, and materials ended the day in the red. Tech had a particularly good day that boosted both chip and software stocks.

“The old adage about ‘don’t short a dull tape’ applies once more,” writes Steve Sosnick, chief strategist at Interactive Brokers. “The summer doldrums don’t need much of an excuse to turn positive, and steady gains throughout much of the tech sector are proving sufficient.”

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The Hot Stock: Workday +17.8%
The Biggest Loser: Tapestry -16.5%

Best Sector: Communication Services +1.6%
Worst Sector: Materials -0.7%

Here’s a use for AI you probably didn’t think of before: cracking down on Chinese tariff evasion. On Thursday the White House said government agencies will use an AI-powered “Detective Border” to increase monitoring and enforcement of China’s use of transshipment—sending goods through a third country—to avoid paying tariffs.

Transshipments became more prevalent after the Trump administration’s first wave of tariffs on China back in 2018, according to a report from the Office of Trade and Manufacturing Policy. The government alleges that tariffs last year made the practice more popular. The White House Council of Economic Advisers estimates that potentially illegal transshipments may have cost the U.S. about $60 billion in tariff revenue last year alone.

The Detective Border AI tool will analyze global trade data, including declared origins, routing histories, and shipment content, to flag inconsistencies, report my colleagues, Reshma Kapadia and George Glover. Many of the U.S.’s biggest trade partners, from Canada, the EU, Mexico, to Indonesia, Vietnam, and Turkey, have been alerted of the crackdown—reflecting how the plan isn’t about “‘going after China,’ but rather ‘its enablers,’” Reshma and George note.

You can read the full story here.

The Census Bureau reports retail and food service sales for July tomorrow. The Consensus call is for 0.1% month-over-month increase, slightly lower than June’s 0.2% increase.

The University of Michigan releases its Consumer Sentiment index for August. Consensus estimate is for a 54.5 reading, about one point less than in July. Consumer expectations for the year ahead inflation was 4.2% in July.

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