The case for a September rate cut got even stronger on Wednesday as Wall Street welcomed another promising signal that pricing pressures are easing.

The Consumer Price Index (CPI) showed inflation held largely steady in July. Consumer prices rose 2.9% year over year in July, the first time headline inflation has dipped below 3% since 2021. On a "core" basis, stripping out costs of food and energy, prices rose 3.2% year over year. Both numbers largely met Wall Street forecasts.

The S&P 500 (^GSPC) rose 0.4% while the tech-heavy Nasdaq Composite (^IXIC) finished just above the flatline. The Dow Jones Industrial Average (^DJI) gained 0.6%, or more than 200 points.

There's an absolutist view on covering financial markets I've developed over the years which says that when a stock goes up, something good has happened, and when a stock goes down, something bad has happened.

The beauty of markets is that it only takes one person disagreeing with this view to "make a market," and thus, we are left with an efficient machine known as the modern financial market.

And so on this basis, we argue that investors are actually concerned about reporting late Tuesday that said the US government will be looking to break up Google. In afternoon trade, shares of its parent company Alphabet were down 3%.

Tuesday's report from Bloomberg outlined the variety of remedies the government could propose —spinning off Android, or Chrome, forcing a sale of AdWords, and so on.

Former Microsoft exec Steve Sinofsky had a great thread on X about the issue, noting that any process will take years and that floating these proposals through the press is, and will continue to be, part of the action.

For a lot of analysts and investors, these years-long legal unknowns can prove a real challenge.

Many analysts will maintain a sum of the parts valuation of companies they cover, which values the distinct units — say, YouTube, Chrome, Android, and so on — on a hypothetical standalone basis.

The math here might even make a breakup almost look appealing.

Additionally, it's very hard to capture in a financial model any kind of institutional lag, complacency, or other negative side effect that might result from having an issue like a government-forced breakup of your company hanging over your head.

But as Sinofsky nods at in his thread, there's a credible view that the consent decree which lingered over Microsoft did lead to the company "missing" some of the biggest computing trends — notably mobile — in the years that followed the ruling.

And while it might be hard to remember now, the stock was dead money from the height of the tech bubble until 2015.

Former JPMorgan strategist Marko Kolanovic is doing with his newfound free time what so many dream of doing without the responsibilities of a day job — posting more online.

Kolanovic left JPM earlier this summer after having maintained a bearish view on stocks during much of the AI-fueled rally. Shortly after his departure, the Nasdaq fell into correction and the S&P 500 endured one of its worst three-day stretches in years.

In a post on X Wednesday afternoon, Kolanovic noted that inflation coming down — while it is what the Fed has been working toward for years — brings with it a more complicated economic story in the coming months.

And moreover, reminds investors that rate cuts are rarely cause for celebration in markets.

For rate-sensitive sectors of the economy, or investors with exposure to the wide world of asset classes outside of the stock market, the prospect of lower rates is clearly a welcome sign.

But a simple look at the fed funds rate over time shows us the clear story Kolanovic is gesturing toward.

Because outside of 2019's rate cut and the Fed's move in the mid-'90s, the central bank rarely cuts rates "just because." And while recessions are called in hindsight, there is little in market history that offers investors comfort with the idea that lower rates are a positive signal about the business cycle.

It's a great time to announce a new CEO in corporate America.

Shares of Victoria's Secret (VSCO) rose as much as 15% in afternoon trade on Wednesday after the company named Hillary Super, CEO of Rihanna's Savage X Fenty brand, as its next CEO.

Even including Wednesday's pop, shares of the company are are still down some 17% so far this year. And Super's appointment — and the resulting enthusiasm from investors — reminds us of the move seen in Starbucks (SBUX) on Tuesday when that company announced Chipotle CEO Brian Niccol would take the reins in October.

On the one hand, two iconic brands that had fallen out of favor with investors getting new leadership is an idiosyncratic event. Business fortunes are always rising and falling, and new leadership is a conversation during any moment of turbulence for any company in any industry. (Unless, of course, you're at a founder-led Big Tech company where they control all the voting stock!)

On the other hand, the business cycle is clearly turning. And with that comes the expected need for change at the top of not just Victoria's Secret and Starbucks, but all kinds of companies that will have the economic environment dictate a new kind of strategy in the coming years.

We've made it through a period of high rates and multi-decade highs in inflation. But these came at a time when the job market was red hot and consumer spending was still being uncorked after cautious years around the pandemic.

Now, lower rates, an entrenched consumer, and a softer labor market await executives in the year ahead.

Back in the weeks just before the pandemic in 2020, we wrote about the idea that new CEOs would be needed as the economy moved on from what one strategist called a "preserve and protect" era that followed the financial crisis. And though the pandemic's earliest days did, in fact, require that same skill, the energy that coiled across culture and the economy during the pandemic did ask for new leadership ideas.

And as that cycle turned, executive turnover accelerated.

And then interest rates started rising, discipline was again on the menu, and companies who weren't willing or able to understand that pandemic-era trends were once-in-a-lifetime events — and not, in fact, the beginning of a whole new demand lever — saw change at the top.

Seen this way, then, that two iconic consumer names are looking for a restart at this moment isn't quite a random event.

The latest inflation data was roughly in line with expectations, showing price increases continue to cool on an annual basis as investors debate when and how deeply the Federal Reserve should cut interest rates.

And while inflation was the reason the Federal Reserve began hiking interest rates, the central bank's other mandate, maximum employment, is now moving to the forefront amid the rate cut debate.

"These [job] payroll numbers are really where the action is going to be over the next couple of months," Citi global economist Nathan Sheets told Yahoo Finance. "That's where the Fed is going to be focusing by far the most of its attention."

With inflation now tracking below the Fed's 2% target on a three-month basis (as seen in the below chart), Wall Street is now arguing the more concerning trend in economic data lies in the labor market, where the unemployment rate has been steadily rising and monthly job additions have been falling.

"Today’s CPI report confirms a trend that has been in place for a number of months: inflation moderating to a more normalized run rate level of price gains, and one that should continue to build confidence for the Federal Reserve that this part of its mandate has been durably tamed," Rick Rieder, BlackRock’s chief investment officer of Global Fixed Income, said after the release.

Rieder added, "The key point now for the Fed is not necessarily a prerequisite for inflation coming down to move rates lower, but labor-market slack building. So, the other side of the dual mandate is now demanding more attention."

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US stocks edged mostly higher Wednesday afternoon as Wall Street digested a key signal on consumer prices that is set to help shape the near-term future of interest-rate policy. A reading on US inflation showed that consumer price increases came in line with estimates during the month of July, according to the latest data from the Bureau of Labor Statistics released Wednesday.

The S&P 500 (^GSPC) rose 0.1%, while the tech-heavy Nasdaq Composite (^IXIC) lost 0.3%. The Dow Jones Industrial Average (^DJI) gained 0.4%

A milder inflation reading released Wednesday removes one of the last hurdles the Federal Reserve needed to clear before cutting rates in September, reports Yahoo Finance's Jennifer Schonberger.

The Consumer Price Index (CPI) increased 2.9% over the prior year in July, down from June's 3.0% annual gain in prices. On a "core" basis, which strips out the more volatile costs of food and gas, prices in July climbed 3.2% over last year — down from 3.3% in June. That was the smallest increase since April 2021.

The new numbers are the latest confirmation that inflation is in fact cooling once again after heating back up during the first quarter of the year, a development that prompted the Fed to warn at one point that rates would likely stay higher for longer.

Market bets place the likelihood of a 50 basis point cut at about 44%, down from a day ago of 53%, accoridng to the CME FedWatch tool.

Following reports that the US Justice Department is considering a proposal to break up Google's businesses, shares of its parent company Alphabet fell more than 3% Wednesday morning.

The discussions followed a pivotal ruling last week, when a judge found Google's search and ad businesses violated antitrust law. The ruling sided with the US Justice Department and a group of states in a set of cases alleging the tech giant abused its dominance in online search.

While Google has said it will appeal the decision, the judge presiding over the case has asked the parties to submit their proposals on how to remedy the anticompetitiveness.

Potential business units that Google would have to divest if a break up plan moves forward include the Android operating system and the web browser Chrome, according to Bloomberg.

The scrutiny aimed at Google is part of a wide-ranging effort by the Biden administration to rein in what it views as anticompetitive behavior across a number of industries, from healthcare to groceries to tech.

In the biggest deal in the packaged food industry, the family-owned food giant Mars said Wednesday it will buy the maker of Pringles, Kellanova (K), for nearly $36 billion.

Mars, which is home to brands like Skittles, M&M's, and Twix, will pay $83.50 per share for Kellanova, representing a premium of more than 30% from earlier this month, when Reuters first reported that the company was discussing a deal.

Shares of Kellanova, which makes Pop-Tarts and Eggo, rose by nearly 8% during morning trading.

When the deal closes, Kellanova will become part of Mars Snacking. The combined companies expect to double their snacking business.

"The Kellanova brands significantly expand our Snacking platform, allowing us to even more effectively meet consumer needs and drive profitable business growth," said Andrew Clarke, global president of Mars Snacking, in a statement.

Inflation data that largely met Wall Street forecasts and showed continued progress in combatting price pressures served as the latest signal that the Fed will likely cut interest rates next month.

Investors reacted by pushing stocks slightly higher. The S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) were up around 0.2%. The Dow Jones Industrial Average (^DJI) hovered near the flatline.

Consumer prices increased less than expected in July as investors continued to look for signs that the Federal Reserve could begin to cut interest rates.

The July Consumer Price Index (CPI) showed prices ticked up slightly at 0.2% over last month, an increase from the 0.1% decline in June. Prices rose 2.9% over the prior year, a decrease from the 3% seen in June. The report marked the first time that overall inflation, on a year-over-year basis, has come in below 3% since March of 2021.

Economists had expected prices to increase 0.2% month over month and rise 3% year over year, according to Bloomberg data.

When removing the volatile food and energy categories, "core" inflation fell to an annual rate of 3.2% from 3.3% the month prior. Economists surveyed by Bloomberg had expected core inflation of 3.2%. On a monthly basis, core inflation was 0.2%, up slightly from the 0.1% the month prior.