Inflation concerns trigger a market dip as new data shows impact of Trump tariffs in June

Markets have been on a rollercoaster since Trump unveiled his aggressive plans at April’s Liberation Day announcement, though stocks have mostly recovered since a calamitous collapse in the spring. But with Trump once again threatening an aggressive hike on trading partners’ levies on Aug. 1, and the existing tariffs already impacting consumer goods, volatility is likely still on the horizon for investors.

Ignore ‘Sell America’

The Consumer Price Index, which tracks goods and services costs, is a reliable tracker for measuring inflation, with investors often turning to updated data to predict potential macroeconomic changes, such as Federal Reserve rate cuts. Though CPI has been trending downward since a peak in 2022, a reversal could prolong cuts, especially with Federal Reserve Chair Jerome Powell warning that Trump’s tariffs are likely to negatively impact inflation, much to Trump’s chagrin.

The new data on Tuesday triggered mixed results for stocks, with banks like Wells Fargo and JPMorgan dropping despite better-than-expected earnings results. Nvidia, the first $4 trillion company, rose on Tuesday after announcing it hoped to resume sales of certain general processing units to China, which had been previously restricted due to export controls.

Tuesday’s dip in the S&P 500 demonstrated that investors are still waiting ahead of Trump’s new tariff deadline of Aug. 1, which would impose steep import costs on dozens of U.S. trading partners. Still, JP Morgan’s U.S. head of investment strategy, Jacon Manoukian, told Fortune that he remains confident in the U.S. economy’s long-term dominance, describing the so-called “Sell America” trade as short-sighted. “We completely disagree with the idea that the U.S. is somehow losing its position as the center of the financial universe,” he said.

Other assets also fell on Tuesday, with Bitcoin’s hot streak cooling down as the top cryptocurrency fell around 2.9% at the time of publication. It dropped below its new benchmark of $120,000, though it still remained above $115,000. But that could change as the House of Representatives continues with its self-announced “Crypto Week,” as lawmakers consider different bills that would establish regulatory frameworks for stablecoins and other cryptocurrencies. Circle, the stablecoin company that went public in June, fell about 4.6% on Tuesday.