The inflation gauge the Federal Reserve relies on most to decide whether to raise or lower U.S. interest rates is likely to cement a decision by the central bank to stand pat at its next meeting at the end of July.

Stocks tiptoed toward fresh highs, then got cold feet. A glimmer of hope from Nvidia’s China chip sales briefly lit the room, but cooler-than-hoped inflation doused the mood.

The Bureau of Labor Statistics reported that the consumer price index (CPI), a popular inflation gauge, increased in June to 2.7% on an annual basis as prices rose for consumers.

The Consumer Price Index in June rose 2.7% on an annual basis, a sign inflation around the U.S. is creeping up after declining earlier this year.

Both the S&P 500 (.SPX) and Nasdaq (.IXIC) - and by extension, MSCI's world equities index (.MIWD00000PUS) - retreated from record peaks after traders shaved back bets of U.S. rate cuts this year as prices rose for things such as coffee and couches, while staying steady for tariff-exempted (for now) items such as cars.

Initial early gains following the June data were reversed as pass-through effects from tariffs stoke concerns.

For much of this year, bond investors were all but certain that the Federal Reserve would resume cutting interest rates by September. Most Read from BloombergWhy Did Cars Get So Hard to See Out Of?How German Cities Are Rethinking Women’s Safety — With TaxisPhiladelphia Reaches Pact With Workers to End Garbage StrikeLately,

The CPI rose 0.3% month-over-month in June, accelerating from May’s 0.1% pace. Year-over-year inflation also jumped to 2.7%, up from 2.4% in May. Core CPI, which excludes food and energy, rose 0.2% in June and came in at 2.9% annually — signs that underlying inflationary pressure remains sticky.