US stocks rose on Tuesday after data showing consumer prices declining took some pressure off the Federal Reserve to raise interest rates.
The S&P 500 Index closed 0.4% higher in New York, reversing Monday's slump. The Nasdaq 100 Index climbed 1.1% following a recovery in South Korea's memory giants, with gains from SK hynix Inc. and Samsung Electronics Co. helping lift peers in the US.
US consumer prices fell in June for the first time in six years, while a key gauge of underlying inflation was little changed. Investors are now awaiting figures on producer prices due Wednesday.
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"The market was expecting kind of a softer inflation read, and this number turned out to be a little bit softer than market expectations," said Subadra Rajappa, head of US research at Societe Generale. "I think I'd be a bit more focused on PPI tomorrow that feeds into core PCE later on this month to get a better read of the Fed's favorite measure of inflation, which is core PCE."
| The CPI report was much better than expected, according to Bill Adams, chief US economist at Fifth Third Commercial Bank. The report likely provides cover to hold rates steady at the next meeting, he said, adding that the outlook for inflation is less promising in July, with higher gas prices. "The June slowdown is particularly heartening since it follows April's update to the CPI shelter component, which filled in survey data that went missing during last year's government shutdown and made shelter prices look deceptively cool in late 2025 and early 2026," he said. Traders also parsed Fed Chairman Kevin Warsh's testimony before lawmakers. Warsh said the Fed has no tolerance for high inflation, restating a vow to tame price growth that has been elevated for five years. The testimony was prepared prior to the release of the latest inflation data. ALSO READ: Cognizant, Salesforce, Accenture Slide Up To 3% As IBM's Weak Outlook Sparks Software Selloff In geopolitical news, President Donald Trump backed away from his plan to impose a 20% charge on cargo shipments through the Strait of Hormuz after US allies in the Gulf urged him to drop it. The interim peace agreement between the US and Iran has effectively collapsed. American forces reimposed a naval blockade and launched another wave of airstrikes, while Tehran attacked more oil tankers sailing through the Strait of Hormuz. Brent crude surged to $85.40 a barrel as a result. JPMorgan Chase & Co. rose 2.5% after it reported its highest quarterly profit ever as stock traders blew past analysts' estimates. Citigroup Inc. and Wells Fargo & Co. fell after reporting results while Bank of America Corp. shares climbed 1.9%. Goldman Sachs Group Inc. rose 9.0% after beating expectations on equities sales and trading revenue for the second quarter. Outside of the banks, International Business Machines Corp. slumped 25% after reporting preliminary quarterly sales that missed analyst estimates. "Earnings season is off to a very good start," said Louis Navellier, chief investment officer at Navellier & Associates. Among other single-stock moves, Lucid Group Inc. plunged 16% to close at an all-time low as the electric-vehicle maker hired restructuring advisers to turn around its struggling business while dismissing rumors that it is considering bankruptcy. |
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