U.S. stocks opened mixed on Tuesday after June inflation data came in below expectations, with gains in the S&P 500 and Nasdaq $NDAQ offset by surging oil prices and a steep drop in IBM $IBM stock.
The S&P 500 rose 0.3%, while the Nasdaq gained 0.6%. The Dow Jones Industrial Average slipped roughly 0.2%.
The consumer price index for June dropped 0.4% from the prior month, holding the year-over-year rate at 3.5% — below the 0.2% monthly decline and 3.8% annual rate that Dow Jones-surveyed economists had anticipated. After the report, CME $CME FedWatch data showed the probability of a Fed rate hike at the July meeting retreating to roughly 16%-17%, down sharply from 42% the day before, though a September increase remained the base case for many traders at around 63%.
Federal Reserve Chair Kevin Warsh is scheduled to testify before Congress on Tuesday, where he will pledge to bring inflation under control.
IBM was among the session's biggest losers, with shares cratering roughly roughly 24% after management cautioned that a slowdown in its software and infrastructure segments would leave second-quarter earnings below Wall Street's targets.
Oil built on Monday's surge, pushing U.S. crude past $80 a barrel while Brent futures climbed roughly 3% to clear $86. The move came after President Trump declared on Monday that he was restoring a blockade targeting Iranian vessels in the Strait of Hormuz, a decision that sent Brent crude up more than 9% — its steepest one-day advance in five years.
Skyler Weinand, chief investment officer at Regan Capital, told CNBC: "Tuesday's weaker-than-expected CPI print suggests the inflation surge driven by the Iran war is fading, but this may just be a temporary relief as tensions have escalated in recent days. The weaker inflation data likely keeps the Fed on hold for now and reduces any rate hike odds, but we remind investors that almost every communication that has emanated from Chair Warsh during his short tenure so far has been hawkish."
Chip stocks helped cushion broader losses, with the VanEck Semiconductor ETF advancing more than 2%. Teradyne and Lam Research $LRCX each jumped 5%, Micron $MU Technology was up more than 4%, and Applied Materials $AMAT tacked on more than 3%.
Among major bank earnings, JPMorgan $JPM Chase, Wells Fargo $WFC, and Citigroup $C each saw their stock fall after reporting second-quarter results. Goldman Sachs $GS stock rose about 4% after posting an earnings beat. JPMorgan CEO said "the U.S. economy has demonstrated notable resiliency this year, with stronger business investment and hiring."