Major indices are near the opening levels with ten sectors showing losses, while Communication Services (XLC) is the only sector in the green.

A hotter-than-expected PPI made the Fed’s decision regarding a September rate cut even tougher. CME Fed Watch now has odds of a 25bps September rate cut at 90.6%. 

St Louis Fred President Musalem (a 2025 FOMC voter), who has been mostly hawkish, gave a mixed interview this morning saying, “it’s too early” to decide on a September rate cut and made clear a 50bps rate cut would be “unsupported by the current state of the economy and the outlook for the economy.”

The 10-year yield is having a bullish day after testing support.

Breadth is weak this afternoon with decliners outpacing advancers by a nearly 4-to-1 margin on the NYSE and a 3-to-1 on the Nasdaq.

Today’s retreat is keeping major averages from further record hunting, while still holding on to healthy gains for the week.