July CPI and PPI prints plus Cardinal Health earnings headline a week where the Fed's AI-capex inflation view and consumer resilience data could shift market odds on the next rate move.
The week ahead brings two big inputs for markets: July inflation data and a key earnings report from Cardinal Health, the last of the Club names to report this season.
The consumer price index lands Wednesday, the producer price index Thursday. Economists expect headline CPI at 3.4% year over year and core at 2.5%, according to FactSet. On the wholesale side, the PPI is seen rising 0.1% month over month, with core at 0.3%.
The inflation conversation has been dominated by energy prices tied to the Iran war. But Federal Reserve Governor Lisa Cook flagged another driver in a July speech at The Exchequer Club of Washington: the AI data center buildout. Cook said the capex cycle "has caused significant price increases for chips, other high-tech equipment, software, and utilities." She repeated that view Wednesday, adding she was "prepared to act, if necessary," on a rate hike.
Data centers consume copper, electricity, and labor at scale. That combination, Cook said, means "inflation risks now outweighing employment risks" relative to a year ago. The upshot: even if oil prices break lower, the AI capex cycle may keep inflation sticky above the Fed's 2% target for at least another year – and signs point to it lasting well into 2028.
Friday's disappointing July payrolls – a loss of 23,000 jobs against a consensus call for a gain of 83,000 – could keep the Fed on hold in September, even as the unemployment rate ticked lower to 4.1%. That drop was partly a function of a participation rate that fell to a multiyear low of 61.4%.
There are dueling views within the Fed on the AI capex cycle, as our colleague Michael Santoli has noted. Fed Chair Kevin Warsh has argued that once AI proliferation ramps, it will help keep inflation low through productivity gains. The bottom line: next week's CPI and PPI reports are backward-looking, and it's clear the Warsh-led Fed is looking beyond traditional metrics these days, trying to figure out where the puck is going.
The other notable data points are existing home sales Tuesday and retail sales Friday. Of the two, retail sales carries more weight because it shows where the consumer is spending and whether resilience is holding up in the face of rising prices. Existing home sales matter, particularly for Home Depot shareholders, but the housing market's issues – lack of supply and high interest rates – mean a single good report won't change the narrative much.
On the earnings side, Cardinal Health is the only Club name reporting this week. The stock is within 1.5% of its all-time high. Cardinal distributes drugs and supplies to hospitals and pharmacies, but has been pushing into more profitable ventures: specialty pharmaceuticals, direct-to-patient home delivery, and acquiring the business side of medical practices.
Its two main peers, Cencora and McKesson, both reported last week. Both beat on top and bottom lines and raised full-year guidance. Common strength was in specialty businesses covering cancer and urology treatments. Cardinal's performance there will be a key watch.
This is Cardinal's fiscal 2026 fourth quarter, so fiscal 2027 guidance will influence the market reaction. Revenue missed last quarter, so the bar is set for a clean beat.
GLP-1 drugs from Eli Lilly and Novo Nordisk are driving shipment volumes for drug distributors, but they're not big profit drivers for Cardinal. Something else Lilly said on its call piqued our interest ahead of Cardinal's report: momentum for its Alzheimer's drug Kisunla, helped by increases in diagnostic testing. Cardinal's nuclear medicine unit makes and distributes Vizamyl, GE Healthcare's diagnostic agent for Alzheimer's used during PET scans. GE Healthcare saw double-digit revenue growth for Vizamyl in the June quarter. Cardinal has invested to ramp production of Vizamyl and other radio diagnostics for cancer and coronary artery disease. This is one of those more profitable focus areas.
Two home-health acquisitions Cardinal made in July could come up on the earnings call.
The LSEG consensus: revenue of $65.03 billion, EPS of $2.42.
Cardinal reports before the bell Tuesday.
Prepared with AlphaScala editorial tooling from the source reporting linked above. Indexable analysis may include a cited Alpha Score value. Publishing checks screen each story before release. Educational coverage, not personalized advice.