Cool CPI Print Ignites Market Rebound as Bitcoin, Gold and Stocks Rip Higher

A blockade on Iranian shipping and a much cooler than expected inflation report sent global markets through a two-day reversal this week.

Key Takeaways

• The S&P 500 fell 0.79% to 7,515.34 Monday after Trump reinstated a blockade on Iranian ports.
• June CPI fell to 3.5% year over year, below the 3.8% forecast, lifting bitcoin near $64,000.
• Fed Chair Kevin Warsh testifies before Congress today as the FOMC’s next meeting lands July 29. His statements may change market sentiment.

Stocks, bonds, crypto and metals all sold off Monday as the United States and Iran traded strikes near the Strait of Hormuz. President Trump announced a renewed naval blockade of Iranian ports, and CENTCOM said the action would take effect Tuesday at 4 p.m. ET. Iran’s Islamic Revolutionary Guard Corps (IRGC) struck two United Arab Emirates tankers in Omani waters, killing one crew member. Jordan said it intercepted four missiles fired from Iran.

Oil Jumps, Stocks Fall

Crude prices moved sharply on the blockade news. West Texas Intermediate settled up at $79 a barrel, and Brent crude closed above $83, its biggest one-day percentage gain in more than six years.

Equities fell across the board. The S&P 500 dropped 0.79% to close at 7,515.34. The Nasdaq Composite lost 1.55% to finish at 25,873.18, weighed down by chipmakers. SK Hynix fell 9% after its Nasdaq debut the prior week, and Micron Technology dropped 4%. The Dow Jones Industrial Average slid 138 points, or 0.26%, to 52,498.64, cushioned somewhat by energy shares.

Treasury yields climbed as traders priced in stickier inflation. The 10-year yield rose to around 4.62%, and the 2-year yield touched its highest level since early 2025. Gold fell about 1.4% to near $4,064 an ounce despite the geopolitical backdrop, as a firmer dollar and higher real yields offset safe-haven demand. Bitcoin dropped alongside equities, touching a Monday low near $61,700.

CPI Flips the Script

Tuesday brought a different story. The Bureau of Labor Statistics (BLS) reported that headline CPI fell to 3.5% year over year in June, well below the 3.8% consensus forecast and down from 4.2% in May. The decline was driven mainly by a roughly 10% monthly drop in gasoline prices tied to a mid-June ceasefire that briefly reopened the Strait of Hormuz.

The softer print shifted expectations for the Federal Reserve’s next move. Futures for the S&P 500 and Nasdaq rose in early trading. Bitcoin climbed back toward $64,000 intraday as traders unwound bets tied to Monday’s risk-off mood. Gold and silver also advanced, with silver gaining roughly 2%.

Federal Reserve Chair Kevin Warsh is scheduled to testify before Congress Tuesday and Wednesday as part of the central bank’s semiannual monetary policy report, his first appearance on Capitol Hill since taking over as chair. Fed Governor Christopher Waller said Monday that a hot core inflation reading would push the central bank to consider raising rates soon. The Fed’s target range has sat at 3.5% to 3.75% since June, and the next policy decision is scheduled for July 29.

Why It Matters

The two-day swing shows how tightly oil, inflation data, and risk assets are now linked. A few factors stand out for readers tracking the fallout:

• Energy costs pass through to headline CPI fast, but the Fed’s preferred core inflation gauge, which excludes food and energy, has stayed closer to 2.8% to 2.9%.
• Bitcoin and equities moved almost in lockstep this week, reflecting Bitcoin’s continued high correlation to Nasdaq-style risk assets.
• Gold‘s Monday decline despite active fighting near a major oil chokepoint shows how rising real yields can outweigh safe-haven demand.

What Comes Next

The blockade and the earlier Strait of Hormuz disruptions remain the biggest wildcard for markets. Since February, Iran has largely blocked shipping through the strait, a route that normally carries about a quarter of the world’s seaborne oil trade. Any further disruption could push oil, and headline inflation, back up quickly, even after Tuesday’s relief.

Investors now turn to Wednesday’s producer price index, Thursday’s retail sales data, and a wave of second-quarter bank earnings from JPMorgan Chase, Goldman Sachs, Bank of America and Wells Fargo, all reporting this week. Warsh’s testimony will be watched closely for any signal on whether the Fed sees Tuesday’s soft CPI print as durable or as a one-month effect of falling gas prices.