Underlying U.S. inflation accelerated in July by the most since the start of the year, though a tepid rise in the costs of goods tempered concerns about tariff-driven price pressures.

The core consumer price index, which excludes the often volatile food and energy categories, increased 0.3% from June, according to Bureau of Labor Statistics data out Tuesday. That was in line with economists' forecasts, as was the overall CPI on a monthly basis.

Markets initially took the numbers in stride with Treasuries rallying and the S&P 500 opening higher, though they later pared some of those gains. Still, traders increasingly bet that the Federal Reserve will cut interest rates next month, especially given a softening labor market.

"Inflation was broadly in line with expectations as tariffs conti

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