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Equity Markets Mostly Rise Intraday After Inflation Data, Bank Earnings

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Equity Markets Mostly Rise Intraday After Inflation Data, Bank Earnings

US benchmark equity indexes were mostly higher intraday as traders assessed the latest inflation data and quarterly results of banking giants.

The Nasdaq Composite was up 1.1% at 26,150.9 after midday Tuesday, while the S&P 500 rose 0.5% to 7,551.2. The Dow Jones Industrial Average fell 0.1% to 52,469.6. Among sectors, technology paced the gainers, while healthcare saw the biggest drop.

The US consumer price index declined 0.4% in June, its first monthly drop since May 2020 and the largest decline since April 2020, amid lower energy costs, official data showed. The consensus in a Bloomberg-compiled survey was for the index to move down by 0.1%.

Annually, inflation cooled to 3.5% last month from May's 4.2%, compared with expectations for a 3.8% print.

"Investors and the Federal Reserve will breathe a sigh of relief at the size of the improvement in the inflation numbers last month, likely keeping an imminent rate hike off the table later this month," BMO said in a note.

There's now an 83% likelihood that the Fed will keep its monetary policy unchanged at its July meeting, up from 58% Monday, according to the CME FedWatch tool. The odds of a 25-basis-point rate increase slid to 17% from 42%.

US Treasury yields were lower intraday, with the two-year rate down 5.1 basis points at 4.21% and the 10-year rate falling 2.5 basis points to 4.59%.

In corporate news, Goldman Sachs (GS), JPMorgan Chase (JPM), Wells Fargo (WFC), Bank of America (BAC) and Citigroup (C) all posted strong second-quarter results Tuesday.

Goldman shares were up 7.7% intraday, the best performer on the Dow and the second-top gainer on the S&P 500. JPMorgan and Bank of America were also higher, while Citigroup and Wells Fargo fell.

IBM (IBM) shares slumped 25%, the worst performer on the S&P 500 and the Dow. The computer and software company's preliminary second-quarter results fell short of Wall Street's expectations, with Chief Executive Arvind Krishna calling the performance "disappointing."

West Texas Intermediate crude oil was up 1% at $78.88 a barrel, while Brent rose 1.5% to $84.54.

US President Donald Trump said Tuesday he would no longer demand a 20% "reimbursement fee" from ships passing through the Strait of Hormuz. In a social media post, Trump said he has "decided to replace" the fee with "trade and investment deals" with Gulf countries.

Amid renewed tensions in the Middle East, Trump also said a "full blockade" will be enforced on all ships coming to and from Iranian ports, while the strait remains open.

Fed Chair Kevin Warsh vowed to curb high inflation straining American consumers and companies, affirming the central bank's commitment to restore price stability.

Monetary policymakers "have no tolerance for persistently elevated inflation," Warsh said while speaking before a US House of Representatives committee. "If we get policy right -- and we will -- the inflation surge of the last five years will be a thing of the past."

Gold was up 1.4% at $4,062.20 per troy ounce, while silver gained 1.7% to $58.96 per ounce.

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