1:25pm: Goldman deepens ETF push

Goldman Sachs Group Inc (NYSE:GS, XETRA:GOS) ( Goldman Sachs Group Inc (NYSE:GS, XETRA:GOS) , Goldman Sachs Group Inc (NYSE:GS, XETRA:GOS) ) will acquire exchange-traded funds provider Neos Investments in a deal valued at up to $2.25 billion, the bank said Wednesday, deepening its push into the fast-growing derivative income ETF market.

The Connecticut-based ETF issuer manages roughly $30 billion across 19 options-based income ETFs, according to data cited by Jefferies.

The acquisition follows Goldman's deal late last year to buy ETF operator Innovator Capital Management for $2 billion. Once the Neos transaction closes, Goldman's combined ETF assets will total $130 billion.

The deal, expected to close in the first quarter of 2027, will be paid in a mix of cash and equity, with a portion tied to asset retention and performance targets, according to Jefferies. Neos co-founders Troy Cates and Garrett Paolella will join Goldman Sachs Asset Management as partners when the deal closes, with the rest of the Neos team expected to follow.

12:15pm: Equities hold the line

"Stock markets haven't exactly raced away in the wake of the CPI figures, but it has at least meant they have swerved a nasty afternoon of selling," commented Chris Beauchamp, chief market analyst at IG.

"A hot CPI, combined with thinner August liquidity and a still skittish investor mindset, could have seen the beginnings of a rout. That has been avoided for now, and while a September rate hike looks less likely than it did a few hours ago, the ongoing hawkish views of much of the FOMC means a rebellion against the new chairman and against the president still cannot be ruled out."

11:05am: Positive risk sentiment

LPL's Jeffrey Roach expects inflation to cool toward 2.7% by year-end, supporting positive risk sentiment, but warns that a growing number of hawkish Fed officials could make September's rate decision a close call.

"We expect the debate at the September FOMC meeting to be lively as the economy experiences a tight labor market while the inflation picture is quite blurry," Roach commented. 

"Our baseline is the Fed holds rates steady, but an increasing number of voting members are hawkish and could convince the majority to implement a hike. Overall risk sentiment is positive as inflation is expected to improve by the end of the year."

10:00am: Inflation welcome news for markets

Stocks are edging higher Wednesday after the latest US inflation report largely matched expectations, giving investors some relief that price pressures are not accelerating. The Nasdaq is leading the move, up 0.7%, while the S&P 500 gains 0.3% and the Dow is 0.1% higher.

July CPI rose 3.4% year over year, in line with forecasts, while core CPI increased 2.5%. Bank of America said the core reading was broadly in line, although the details were mixed, with core goods prices hotter than expected but services inflation softer.

AI-related stocks are also helping lift the market. CoreWeave is up about 16% after reporting better-than-expected results, while Super Micro Computer has gained 7% after its revenue forecast topped expectations.

BofA said softer services inflation is encouraging for the Fed, though it wants to see the trend in core PCE before drawing firm conclusions. Housing inflation has largely leveled off, suggesting limited room for further disinflation. "That's welcome news for the Fed," the analysts said.

The bank still expects 75 basis points of Fed hikes starting in September, but acknowledged that recent benign inflation data increase the risk those hikes could be delayed or fail to materialize.

8:55am: Inflation meets expectations

US inflation rose 3.4% year over year in July, easing from 3.5% in June, while CPI increased 0.1% month over month.

Core CPI rose 2.5% annually and 0.2% monthly, with all four readings matching forecasts.

The lack of an upside surprise offers some relief for markets and reduces pressure on the Federal Reserve to raise rates. Wall Street futures ticked higher following the report.

Ahead of the bell

US stock futures are treading water this morning as traders wait for July inflation data that will shape the Federal Reserve's September decision.

Dow futures are flat, S&P 500 contracts are up 0.2% and the Nasdaq 100 is 0.6% higher.

Economists expect consumer prices to have risen 3.4% year on year, down from 3.5% in June, and 0.1% on the month.

The stakes are unusually high because the market is genuinely split.

Traders are pricing roughly a 50-50 chance of a rate rise next month, an unusual position after a softer than expected July jobs report.

A hot print would tip the balance towards a hike.

The backdrop is the Strait of Hormuz, still closed as Washington and Tehran remain deadlocked.

American forces fired on a Panama-flagged vessel attempting to cross the Gulf of Oman on Tuesday, pushing Brent crude close to $90 a barrel.