U.S. stocks traded unevenly on Tuesday after June inflation cooled more than economists expected. The Nasdaq Composite gained 0.5%, while the S&P 500 added 0.3% in early trade. The Dow Jones Industrial Average moved only slightly higher as a sharp drop in IBM limited the index. Lower bond yields supported technology and housing shares, while rising oil prices kept inflation risks in focus.
Softer Inflation Lifts Technology Shares
The Consumer Price Index rose 3.5%from a year earlier in June, down from 4.2% in May. Economists had expected annual inflation of about 3.8%. Consumer prices also fell 0.4% from the previous month, marking the largest monthly decline since April 2020.
Core inflation, which excludes food and energy, stayed flat during June and rose 2.6% from a year earlier. Both readings came below forecasts. Energy prices fell 5.7% and drove much of the monthly decline, easing pressure on household costs during the period.
Technology shares reacted strongly to the softer report. Nasdaq 100 futures rose 1.38% before the opening bell, compared with a 0.48% gain for S&P 500 futures.
S&P 500 futures chart | Source: X
Investors often favor growth companies when yields fall, since lower rates raise the present value of future earnings.
IBM Drop Holds Back the Dow
IBM shares fell about 24% after the company released preliminary second-quarter figures below market estimates. Revenue reached $17.2 billion, while analysts expected about $17.86 billion. Adjusted earnings came in at $2.93 per share, below the $3.02 forecast.
Chief Executive Arvind Krishna said customers shifted spending toward servers, storage, and memory before expected price increases. That move hurt software and infrastructure results during the quarter. IBM plans to provide a full-year update when it reports final results on July 22.
IBM carried unusual weight in the Dow since the index uses share prices rather than market value to set company influence. Before the inflation report, IBM accounted for an estimated 330 points of an indicated 450-point Dow decline. That single-stock move made the Dow appear weaker than the wider market.
Banks Report Higher Profits as Costs Draw Attention
Several large banks reported stronger quarterly profits before the market opened. JPMorgan Chase posted adjusted earnings of $6.14 per share, above the $5.85 estimate. Markets revenue climbed 35%, but the bank raised its 2026 expense forecast to $107.5 billion from $105 billion.
Wells Fargo earned $2.00 per share, beating the $1.72 estimate. Net interest income rose 5% to $12.32 billion as lending income improved. Its shares still fell in early trade as investors weighed the results against recent valuation gains.
Goldman Sachs shares rose more than 4% after the bank reported stronger profits. Bank of America and Citigroup also posted higher earnings. The reports showed resilient consumer spending and active trading desks, though investors continued to watch costs and loan quality.
Oil and Fed Policy Keep Risks Active
Treasury yields fell after the CPI release. The 10-year yield dropped near 4.57% from 4.62% late Monday. Traders also reduced the probability of a Federal Reserve rate increase at the July meeting to about 17%, down sharply from the previous day.
Oil prices moved in the opposite direction. Brent crude rose above $86 per barrel, while West Texas Intermediate climbed above $80. Renewed U.S.-Iran tensions around the Strait of Hormuz supported the advance after crude prices jumped about 9% on Monday.
