Wall Street closed mostly higher on Tuesday as a cooler-than-expected inflation report and solid results from the country’s biggest banks gave investors reason to keep buying, even as a profit warning from IBM held the Dow Jones Industrial Average in check. The Nasdaq Composite led the way, while the S&P 500 also notched a solid gain. The Dow, weighed down by a single bad headline, barely moved.
What Moved Markets
The Dow Jones Industrial Average closed at 52,508.48, up just 9.84 points, or 0.02 percent. The S&P 500 rose 28.25 points, or 0.38 percent, to finish at 7,543.59. The Nasdaq Composite outperformed both, climbing 233.83 points, or 0.90 percent, to close at 26,107.01.
The main driver of the day was the June Consumer Price Index. Prices fell a seasonally adjusted 0.4 percent from May, more than the 0.2 percent decline economists had expected, pulling the annual inflation rate down to 3.5 percent versus forecasts of 3.8 percent. The drop was driven largely by a 9.7 percent slide in gasoline prices, which followed a brief pullback in oil after the United States and Iran signed a memorandum of understanding aimed at ending their conflict. Core inflation, which strips out food and energy, was unchanged from May, holding the 12-month core rate at 2.6 percent. Investors read the report as giving the Federal Reserve more room to consider rate cuts later this year, and Treasury yields fell on the news.
Big bank earnings added to the day’s momentum. JPMorgan, Bank of America and Goldman Sachs all reported quarterly results alongside the CPI release, and the sector’s overall strength helped offset weaker numbers from a couple of their peers.
Notable Movers
International Business Machines (IBM) was the session’s biggest laggard, tumbling 25 percent after warning that second-quarter profit will fall short of expectations. CEO Arvind Krishna pointed to softness in the company’s software and infrastructure businesses, as clients shifted spending toward hardware such as memory chips, servers and storage instead. The single stock’s decline was large enough to keep the Dow nearly flat despite gains elsewhere in the index.
Goldman Sachs (GS) jumped 7.63 percent after posting stronger than expected quarterly results, while JPMorgan (JPM) added 1.49 percent and Bank of America (BAC) rose 1.26 percent. Not every bank fared as well: Citigroup (C) fell 5.77 percent and Wells Fargo (WFC) dropped 3.31 percent on more tepid results.
Chip stocks also rebounded sharply after selling off in the prior session. The VanEck Semiconductor ETF gained 2.5 percent, and among individual names, Applied Materials (AMAT) rose 5.3 percent, Teradyne (TER) advanced 4.9 percent and Monolithic Power Systems (MPWR) climbed 4.5 percent.
Looking Ahead
Investors will keep parsing the CPI details for clues on whether cooler inflation gives the Federal Reserve enough cover to cut rates later this year, alongside a heavier slate of corporate earnings still to come this week. Bank results set an encouraging tone, but the split between winners like Goldman Sachs and laggards like Citigroup and Wells Fargo suggests earnings season could bring more stock-specific volatility than a broad market move in either direction. IBM’s warning is also a reminder that even a calm day for the major indexes can mask sharp moves underneath the surface, and traders will be watching whether other technology and software names face similar demand pressures in the weeks ahead. Geopolitical developments around the Iran memorandum of understanding remain another wildcard for energy prices and, by extension, the inflation outlook.