The Personal Consumption Expenditure (PCE) price index, the Federal Reserve's preferred inflation gauge, measured 3.7% in July 2026. This marks the 65th straight month that PCE inflation has exceeded the Federal Reserve's 2% target and was slightly above the consensus estimate of 3.6%. The July reading was unchanged from June, suggesting sticky inflation. This acceleration is primarily attributed to the Iran war disrupting oil supplies and President Trump's tariffs. Following this data, CME Group's FedWatch tool indicates futures traders are now betting on two quarter-point interest rate hikes in the remaining months of 2026, one in September and another in December. Historically, new rate-hike cycles have often coincided with stock market corrections, and the S&P 500's cyclically adjusted price-to-earnings (CAPE) ratio of 40.6 in July was its highest since September 2000.