US stocks wavered on Tuesday morning as markets assessed a cooler-than-expected consumer inflation report, recalibrated bets on the AI trade, and monitored rising oil prices amid the renewed US-Iran war.
The Dow Jones Industrial Average (^DJI) slipped 0.3%. The S&P 500 (^GSPC) rose 0.2%, and the tech-heavy Nasdaq Composite (^IXIC) rose 0.5%
Investors parsed a softer-than-expected Consumer Price Index report, which showed that inflation rose 3.5% in June, below economists’ expectations of 3.8% inflation. That’s likely to take some pressure off the Federal Reserve, which has become more focused on the inflation situation. Ahead of the report, bond traders increased their bets that the Federal Reserve will hike interest rates at its July 28-29 meeting.
A combination of rate-hike speculation, capex spending concerns, and profit-taking has put AI chip stocks on the back foot, with newly listed US shares of South Korea’s SK Hynix (SKHY) dropping further after a successful US IPO on Friday.
Oil prices, meanwhile, edged higher after Brent crude futures (BZ=F) notched their biggest single-day jump in years on Monday. The US plans to begin enforcing a blockade of the Strait of Hormuz on Tuesday afternoon and charge a 20% fee on all cargo crossing the waterway, reviving concerns that an energy shock could flow through to core inflation.
A series of second quarter reports from JPMorgan (JPM), Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), and Goldman Sachs (GS) showed a robust quarter for Wall Street profits and stock trading. Expectations were high going into the reports and into the second quarter earnings season generally.