U.S. equity markets opened mixed on Tuesday as a softer-than-expected June inflation report alleviated immediate concerns about Federal Reserve tightening, while a steep decline in IBM shares weighed on the Dow Jones Industrial Average.
The Nasdaq Composite rose approximately 0.44%, supported by a rebound in semiconductor stocks. The S&P 500 edged up 0.12%, while the Dow slipped about 0.29%, dragged down by a more than 25% plunge in IBM after the technology giant issued a preliminary second-quarter revenue and profit warning.
CPI Data Eases Rate Hike Fears
The Labor Department reported that the consumer price index (CPI) rose 3.5% year-over-year in June, below economists' consensus estimate of 3.8%. On a monthly basis, CPI fell 0.4%, compared with expectations for a smaller decline. The data prompted traders to significantly lower the probability of an imminent interest rate increase, though expectations for a September hike remained elevated.
Market participants are now turning their attention to Federal Reserve Chair Kevin Warsh's semiannual monetary policy testimony before Congress later Tuesday for further clues on the central bank's policy trajectory.
IBM Plunges on Weak Q2 Outlook
Corporate earnings took center stage as Wall Street's second-quarter reporting season accelerated. IBM shares cratered more than 25% after the company forecast preliminary Q2 revenue below analysts' expectations and warned that profits would fall short due to weaker demand across its software and infrastructure businesses. The weakness spilled over to other software names: Oracle declined 0.79%, while ServiceNow and Accenture each fell more than 5% in trading. For more on IBM's earnings miss, see IBM Plunges 23% After Q2 Miss as AI Hardware Spending Diverts Enterprise Budgets.
In contrast, major U.S. banks reported better-than-expected quarterly profits. Goldman Sachs rose 4.2% on record performance in its equities trading business, driven by stronger dealmaking activity and increased market volatility. JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo all traded higher after posting Q2 earnings that exceeded analyst expectations. Investors are closely watching earnings reports for signs of corporate resilience after the S&P 500's strong rally this year, with analysts expecting second-quarter earnings growth of nearly 24% for the index.
Chip Stocks Rebound, Oil Prices Remain Elevated
Semiconductor stocks recovered from Monday's sharp sell-off, helping lift the technology-heavy Nasdaq. The iShares Semiconductor ETF climbed about 3.6%, and the VanEck Semiconductor ETF advanced more than 2.7%. Among individual chipmakers, Applied Materials gained over 4.11%, Teradyne rose about 5.8%, and Lam Research and Micron Technology each climbed more than 4%. STMicroelectronics added over 2.9%. For context on recent chip sector volatility, see DRAM ETF Plunges 8% as SK Hynix, Samsung, Micron Stocks Tumble on Profit-Taking.
Despite the rebound in technology shares, broader market gains remained limited as oil prices stayed elevated. U.S. crude traded above $80 a barrel, while Brent crude rose more than 4% to above $86 a barrel after President Donald Trump announced plans to reinstate a blockade on Iranian shipping through the Strait of Hormuz. The announcement followed renewed military exchanges between the United States and Iran, reigniting concerns about global energy supplies. For more on the impact of geopolitical tensions on markets, see Nasdaq Futures Drop 290 Points as Chip Stocks Slide on Iran Oil Shock; CPI and Earnings in Focus.
This article is for informational purposes only and does not constitute financial advice.
