EB Daily Market Report - Tuesday, August 12, 2025

Executive Summary

• Futures were higher overnight, then accelerated to the upside after July inflation data came in roughly as expected
• July consumer prices, on an annual basis, matched June's 2.7% reading and came in slightly below estimates for the month; the July Core CPI matched monthly expectations, rising 0.3%
• Etherium ($ETHUSD, +4.97%) is surging again, leading cryptocurrencies higher
• Commodities are mixed as crude oil prices ($WTIC, -1.06%) fall back to $63 per barrel
• The 10-year treasury yield ($TNX) climbed 3 basis points to 4.30%, possibly from profit taking on treasuries after the release of mostly benign inflation data
• 9 of 11 sectors are higher today, led by communication services (XLC, +1.93%) and technology (XLK, +1.28%)
• Internet stocks ($DJUSNS, +2.18%), led by Meta Platform (META, +3.47%), are spearheading today's rally
• Real estate (XLRE, -0.34%) and utilities (XLU, -0.08%) are lagging the other 9 sectors
• Airlines ($DJUSAR, +7.73%) are littering the S&P 500 leaderboard as United Airline Holdings (UAL, +9.25%) is today's best-performing S&P 500 company

Market Outlook

The relatively benign CPI data for July appears to be the catalyst for yet another stock market breakout. We're seeing very strong relative performance from small caps (IWM, +2.21%) and regional banks (KRE, +2.26%), two areas that would benefit immensely from lower short-term interest rates. Here are those two charts:

IWM:

KRE:

Both charts look quite bullish to me. I like the PPOs turning back higher and I suspect that we'll see AD lines quickly move back to new highs as well. The recent consolidation period for these two may have ended and benign July inflation reports could be the catalyst to additional strength ahead.

Sectors/Industries

The absolute and relative strength in internet stocks ($DJUSNS) is continuing. Recently, the DJUSNS broke out above the previous high established in early February. After backtesting the area of the breakout, the DJUSNS is on the move again:

The DJUSNS is one of the key aggressive areas of the stock market where I love to see leadership. That bottom panel highlights the relative strength of the DJUSNS since the April low.

ChartLists and Trading Strategies

Now that we're seeing money rotate back to small caps - at least based on today's action - it makes sense to revisit many of the small cap stocks that I provided back in June. Many have already run significantly higher, but I believe have further to run. The #3 small cap stock that I had listed was Rush Street Interactive (RSI), a gambling stock ($DJUSCA). After its recent quarterly earnings report, RSI gapped up to open at 18.55 on July 31st. It ran as high as 20.32, before settling back over the past couple weeks. It's pulled back to test that 18.55 gap support and now appears ready to resume its uptrend:

Upcoming Earnings

We have included Upcoming Earnings ChartLists on our website for each day throughout earnings season (likely through late August). Be sure to check out these ChartLists on our website.

Economic Reports

July CPI: +0.2% (actual) vs. +0.2% (estimate)

July Core CPI: +0.3% (actual) vs. +0.3% (estimate)

Happy trading!

Tom