US Stock Market Today: S&P 500 Rises as June Inflation Cools and Strong Bank Earnings Lift Stocks

US stocks moved higher on Tuesday after June inflation came in below forecasts. The softer data supported stocks and reduced expectations for an immediate Federal Reserve rate increase.

The S&P 500 gained 0.5%, while the NASDAQ Composite rose 1%. The Dow Jones Industrial Average added about 86 points, or 0.2%. Still, IBM’s sharp decline and higher oil prices kept the market from posting stronger gains.

June Inflation Data Supports Stocks

The consumer price index fell 0.4% in June from the previous month. Annual inflation slowed to 3.5% from 4.2% in May. Economists expected a 0.2% monthly decline and a 3.8% annual increase.

The report eased concerns that recent energy costs would push consumer prices higher. Treasury yields fell after the release, supporting technology shares and housing-related companies. Builders FirstSource and Lennar gained as borrowing costs moved lower.

Traders also reduced bets on a July rate increase. CME FedWatch data showed a 17% chance of a hike, down from 42% one day earlier. Markets still saw a higher chance of tighter policy at the September meeting.

Bank Earnings Lift Financial Shares

Major banks opened the second-quarter earnings season with stronger profits. Goldman Sachs rose after beating estimates, helped by dealmaking activity and equities trading. JPMorgan Chase, Citigroup, and Bank of America also gained after reporting higher quarterly earnings.

Wells Fargo traded lower despite reporting profit above expectations. The broader S&P 500 financial sector still moved higher, with most major sectors posting gains during early trading.

Investors watched the results for information about consumer spending and business activity. The reports showed steady card spending and stronger trading revenue. They also provided fresh data on credit conditions and loan demand.

IBM Slide Weighs on the Dow

IBM shares fell about 24% after the company warned that second-quarter revenue and profit would miss expectations. Weak demand in software and infrastructure weighed on its outlook.

The decline pressured the Dow and pulled several software stocks lower. Oracle, ServiceNow, and Accenture traded in the red as investors reviewed IBM’s warning.

Chief Executive Arvind Krishna said the company failed to close several large deals on schedule. He wrote, “We did not adapt and move quickly enough,” while pointing to weaker execution across key businesses.

Oil Prices Keep Inflation Risks in Focus

Oil prices rose as tensions between the United States and Iran increased. US crude traded above $80 per barrel, while Brent crude moved above $85. Markets reacted after President Donald Trump announced plans to restore a blockade on Iranian shipping through the Strait of Hormuz.

The move raised concerns about global energy supplies. Higher fuel costs could slow the recent drop in inflation and maintain pressure on the Federal Reserve.

Skyler Weinand of Regan Capital said the inflation surge linked to the conflict may be fading. Still, he warned that the relief ‘may just be temporary’ as regional tensions increase.

Chip Stocks Rebound After Monday’s Losses

Semiconductor shares recovered after heavy selling in the previous session. The VanEck Semiconductor ETF rose nearly 2%, while the Philadelphia Semiconductor Index gained more than 3%.

Applied Materials, Teradyne, Lam Research, Micron Technology, and STMicroelectronics all moved higher. NVIDIA also gained after falling sharply on Monday.

The rebound helped the NASDAQ recover part of its previous decline. Meanwhile, investors watched company valuations after recent swings in artificial intelligence shares.

Fed Chair Kevin Warsh prepared to testify before Congress later Tuesday. He repeated that returning inflation to the central bank’s 2% target is a priority. He did not provide a direct signal about the Fed’s next rate decision.

Also Read: US Stock Market Today: Wall Street Slides as US-Iran Tensions Push Oil Higher and Chip Stocks Lower