Major Indexes Mixed as Inflation Data Impacts Market Sentiment
The major U.S. stock indexes are showing mixed performance in Tuesday’s midday trading session, as investors digest the latest inflation data and a flurry of earnings reports from major financial institutions. The S&P 500 is up 0.1% at 6,270.37, hovering near its all-time high set last week. The tech-heavy Nasdaq Composite is showing more strength, rising 0.7% to 20,805.96, while the Dow Jones Industrial Average has declined 0.5% to 44,340.32.
Consumer price data released this morning showed annual inflation in June accelerated to 2.7%, up from 2.4% in May, though the figure was in line with economists’ consensus estimates. This marks the first significant uptick in inflation in several months, potentially complicating the Federal Reserve’s path toward interest rate cuts later this year.
“We’re about to go into a five- to six-month period of accelerating inflation,” said Arend Kapteyn, UBS Group AG’s global head of economic and strategy research. “It’s a trade-off between when the labor market starts to ease versus how quickly inflation data is increasing.”
Nvidia Leads Tech Rally After China Export Approval
Shares of Nvidia (NVDA) have surged nearly 5% in midday trading after the semiconductor giant secured U.S. assurances to resume sales of some artificial intelligence chips to China. The approval of export licenses for the H20 chip not only boosts Nvidia’s earnings prospects but also signals potential progress in trade talks between the White House and key partners.
“The U.S. policy reversal on selling AI chips to China clearly constitutes good news for the industry,” said David Kruk, head of trading at La Financiere de L’Echiquier.
The news has sparked a broader rally in semiconductor stocks, with Advanced Micro Devices (AMD) surging 6% to lead S&P 500 advancers. Other chip-related stocks showing strength include Arm Holdings (ARM) and Broadcom (AVGO), each adding about 2%, while the iShares Semiconductor ETF (SOXX) has gained 1.5%. Server maker Super Micro Computer (SMCI), a major Nvidia partner, has climbed nearly 6%.
Mixed Results from Major Bank Earnings
Several large financial institutions released their second-quarter results this morning as earnings season kicked off in earnest. The results have been mixed, creating volatility in the financial sector.
Wells Fargo (WFC) shares have plunged over 5% after the bank lowered its full-year guidance for net interest income, citing tepid growth amid the ongoing trade tensions. JPMorgan Chase (JPM) is down slightly despite its investment banking division posting a surprise second-quarter gain.
In contrast, Citigroup (C) shares have jumped over 3%, reaching their highest level since the 2008 financial crisis, as investors responded positively to the bank’s quarterly performance.
BlackRock (BLK), the world’s largest asset manager, has seen its shares decline about 6%, making it one of the biggest S&P 500 decliners of the day.
Tech Giants Show Mixed Performance
Among other mega-cap technology stocks, Microsoft (MSFT), Apple (AAPL), and Amazon (AMZN) are each showing modest gains of less than 1% in midday trading. Tesla (TSLA) has dropped approximately 1%, while Meta Platforms (META) is trading slightly lower.
The technology sector continues to demonstrate resilience despite broader market concerns about inflation and potential interest rate implications. Six of the eleven S&P 500 sectoral indices are trading higher, with gains led by communication services, financials, and real estate.
Tariff Concerns and Market Outlook
Investors continue to monitor developments related to the Trump administration’s tariff policies. The European Union has finalized a second list of countermeasures targeting U.S. goods worth €72 billion ($84 billion), including Boeing Co. aircraft, automobiles, and bourbon, if it decides to retaliate against Donald Trump’s tariff policy.
Despite these concerns, a recent survey by Bank of America Corp. showed that fund managers are rushing back into risky assets at a record pace, driven by optimism over economic growth and strong corporate profits. The share of investors taking a higher-than-normal risk level in their portfolios registered the biggest increase over a three-month span going back to 2001.
Upcoming Market Events
Looking ahead, investors will be closely watching additional earnings reports from major financial institutions later this week. Bank of America Corporation (BAC) and The Goldman Sachs Group, Inc. (GS) are scheduled to report their quarterly results in the coming days.
Market participants will also be monitoring upcoming economic data releases for further insights into the impact of tariffs on inflation and the broader economy. July’s inflation data, set to be released next month, will likely provide the earliest clear indication of any effects from the recently implemented tariffs.
Commodities and Currencies
In other markets, West Texas Intermediate crude oil is trading down 0.4% at $66.68 per barrel. Spot gold has risen 0.5% to $3,359.36 an ounce, while Bitcoin has fallen 3.1% to $116,450.51 after hitting a series of record highs in recent weeks.
The U.S. dollar remains relatively stable against major currencies, with the euro trading at $1.1675 and the British pound at $1.3448. The Japanese yen has weakened slightly to 147.91 per dollar.
Treasury yields have shown little movement, with the 10-year Treasury yield holding steady at 4.43%, as investors assess the implications of the latest inflation data on the Federal Reserve’s monetary policy outlook.
As the midday market update concludes, investors remain cautiously optimistic despite inflation concerns, with technology stocks continuing to lead the market while financial stocks show mixed results following the first major earnings reports of the season.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.