Market Indexes Show Divergent Paths as Inflation Data Meets Expectations
The stock market displayed a clear divide at today’s market close, with technology stocks powering the Nasdaq higher while financial stocks dragged down the Dow Jones Industrial Average. The S&P 500 wavered between small gains and losses throughout the session as investors digested the latest inflation data and a flurry of bank earnings.
The Dow Jones Industrial Average fell 333 points, or 0.75%, to close at 44,126.42, weighed down by losses in financial stocks. Meanwhile, the tech-heavy Nasdaq Composite gained 151.93 points, or 0.74%, to finish at 20,792.26, reaching another record high. The S&P 500 edged slightly lower by 1.30 points, or 0.02%, to end at 6,267.26.
“It’s a tale of two markets,” noted market strategist Karishma Vanjani. “The S&P 500 is wavering between small gains and losses, while the tech-heavy Nasdaq has plans to etch a new all-time high today.”
Inflation Data Meets Expectations as Fed Watches Closely
The Consumer Price Index (CPI) for June increased 0.3% month-over-month, putting the annual inflation rate at 2.7%, matching economists’ expectations. Core CPI, which excludes volatile food and energy prices, rose 0.2% for the month and 2.9% year-over-year, also in line with forecasts.
“The market is more focused on this year-over-year number, but I will say the fact that for 5 straight months the month-over-month headline CPI number has come in below expectations, that is meaningful,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.
The inflation data comes as investors continue to anticipate potential interest rate cuts from the Federal Reserve later this year, though political pressures are complicating the outlook. President Donald Trump has repeatedly called for the Fed to lower rates, which some analysts warn could backfire.
Tech Stocks Lead the Charge as Nvidia Surges on China News
Technology stocks were the clear winners in today’s market, with the information technology sector being the only S&P 500 sector solidly higher, up 1.6%. The communication services sector was the next best performer, up a modest 0.1%.
Nvidia (NVDA) was a standout performer, surging more than 4% after announcing it will resume H20 AI chip sales to China “soon.” The company stated, “The U.S. government has assured NVIDIA that licenses will be granted, and NVIDIA hopes to start deliveries soon.”
Other tech giants also performed well, with Advanced Micro Devices (AMD) jumping 6.41% to $155.61, Apple (AAPL) gaining 1.37%, Microsoft (MSFT) adding 0.96%, and Amazon (AMZN) rising 0.56%.
Bank Earnings Disappoint as Financial Stocks Drag Down Dow
Major financial institutions reported earnings before the bell, with mixed results that generally disappointed investors. JPMorgan Chase (JPM) posted better-than-expected second-quarter results driven by strong trading and investment banking revenue, but shares still dipped about 0.83%.
Wells Fargo (WFC) beat earnings expectations but reduced its net interest income guidance for 2025, projecting it to be roughly in line with 2024 levels rather than the previously expected 1% to 3% increase. This sent shares down nearly 4%.
Citigroup (C) was one of the few bright spots among banks, with shares edging higher after the bank topped second-quarter estimates.
Bond Yields Rise, Adding Pressure to Broader Market
The losses in the broader market can be partly attributed to rising yields in the Treasury market. The 30-year yield climbed to 5.016%, a level it has closed above only nine times over the past 15 years. The 10-year yield is approaching 4.5%.
“Higher yields make bonds look more attractive for new buyers and at the margin drive capital away from stocks,” noted market analysts. The rising yields come amid political pressure on the Federal Reserve, with President Trump repeatedly calling for rate cuts.
Economic Data Shows Strength in Manufacturing
In addition to the inflation report, economic data released today showed unexpected strength in manufacturing. The New York Fed’s Empire State Manufacturing index jumped to 5.5 in July, a nearly 22-point improvement over the prior month and much better than the -9.5 forecast from economists.
Within the index, new orders surged 16.2 points to positive territory, while shipments soared 18.7 points to 11.5 and inventories climbed 14.7 points to 15.6. The employment index also improved, rising to 9.2, up 4.5 points from June.
Earnings Season Continues After the Bell
As the market closes today, investors are turning their attention to several key earnings reports scheduled for after hours. Intel (INTC) is set to report its second-quarter financial results on July 24, after market close.
Other notable companies reporting earnings this week include Netflix (NFLX), which is expected to provide updates on its subscriber growth and content strategy, and Qualcomm (QCOM), which investors will be watching for insights into the mobile chip market and 5G adoption.
Market Outlook: Tariff Concerns and Second-Quarter Earnings
Looking ahead, investors remain cautious about potential tariffs after President Trump threatened a 30% tariff on the European Union and Mexico starting August 1.
Expectations for the second-quarter earnings season remain modest. The S&P 500 is projected to post a blended earnings growth rate of 4.3% on a year-over-year basis, according to FactSet data. That would mark the lowest growth rate for the index going back to the fourth quarter of 2023.
As markets close today, investors continue to navigate a complex landscape of strong tech performance, disappointing financial results, inflation concerns, and potential trade disruptions. The divergence between the Dow and Nasdaq highlights the selective nature of the current market rally, with technology continuing to outperform while traditional sectors face headwinds.
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.