The S&P 500 ended lower on Tuesday as strength in the tech sector, led by Nvidia, failed to outweigh weakness in financial stocks. Mixed earnings results from major U.S. banks and fresh inflation data added to investor uncertainty.
At the close of trading, the Dow Jones Industrial Average dropped 436 points, or 1%, the S&P 500 slipped 0.4%, while the NASDAQ Composite inched up 0.2%, notching a second consecutive record high at 20,677.80.
Inflation Data Sends Mixed Signals
The latest Consumer Price Index (CPI) report from the U.S. Labor Department painted a nuanced picture of inflation. Headline inflation rose 2.7% year-over-year in June, slightly above forecasts of 2.6% and up from 2.4% in May. On a monthly basis, prices rose 0.3%, in line with expectations but higher than the previous month’s 0.1% increase.
However, core CPI, which excludes volatile food and energy prices, provided a more reassuring signal. It increased 2.9% annually, just under the 3.0% forecast, and 0.2% month-over-month, slightly below expectations.
CIBC Economics analysts noted that tariff-related price pressures remain modest for now, with companies still working through pre-tariff inventories and absorbing costs. However, as those inventories thin, inflationary pressures could mount, potentially delaying any interest rate cuts from the Federal Reserve.
The Fed remains cautious, with sticky inflation—exacerbated by tariffs—likely keeping policymakers on hold for the near term.
Early-Stage Trade Deal with Indonesia
On the trade front, former President Donald Trump announced a preliminary trade agreement with Indonesia, which includes a 19% levy on Indonesian exports to the U.S. The move adds another dimension to the ongoing reshaping of global trade dynamics.
Financials Drag Amid Earnings Season Kickoff
Bank earnings were in the spotlight as Wall Street banks kicked off the second-quarter reporting season.
- JPMorgan Chase (JPM) fell despite a surge in trading revenue, as the bank’s overall profit declined due to a tough comparison with last year’s one-off accounting gain.
- Wells Fargo (WFC) shares slipped after the bank lowered its annual interest income guidance.
- BlackRock (BLK) also declined, even as the asset manager reported a record $12.53 trillion in assets under management.
Bank of America (BAC) and Goldman Sachs (GS) are set to report results on Wednesday.
Nvidia Lifts Tech Sector with China Sales Resumption
Meanwhile, Nvidia (NVDA) jumped over 4% after announcing it would resume sales of its H20 chip to China. The AI chipmaker also unveiled a new GPU specifically designed for the Chinese market. The announcement came during CEO Jensen Huang’s visit to China, following recent meetings with top U.S. officials and amid signs of easing tensions in U.S.-China tech trade.
Nvidia’s gain helped support the broader tech sector, though not enough to offset losses in financials.
Looking Ahead
This week, a wave of earnings is expected from major U.S. corporations including Microsoft (MSFT), Johnson & Johnson (JNJ), Netflix (NFLX), United Airlines (UAL), American Express (AXP), and 3M (MMM)—all of which will be closely watched for insight into economic momentum and corporate outlooks.
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