U.S. stock futures edged higher in the overnight session late Tuesday as softer-than-expected inflation data boosted technology stocks and eased rate hike concerns, overshadowing escalating tensions between the U.S. and Iran.
Meanwhile, strong quarterly results from top banks on Tuesday reinforced market confidence in a solid earnings season.
Dow futures were up 0.05%, S&P 500 futures climbed 0.18%, and Nasdaq-100 futures climbed 0.61% at 10:20 PM EDT.
Among ETFs tracking benchmark indexes, the , the (DIA) and the Invesco QQQ Trust (QQQ) were trading higher with sentiment in the ‘bullish’ territory.
The was down 0.13% amid ‘extremely bearish’ sentiment.
How Did US Markets Fare On Tuesday?
All three benchmark indexes closed higher on Tuesday, with the Nasdaq leading the decline, climbing nearly 1% higher at close. The S&P 500 was up 0.38%, while the Dow closed marginally higher, up 0.02%.
| IndexMoveClose | Dow Jones Industrial Average0.02%52,508.27 | S&P 5000.38%7,543.59 | Nasdaq Composite0.90%26,107.01 |
US Market Drivers
The strongest boost for U.S. markets on Tuesday came from lower-than-expected June inflation. According to data from the Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) climbed 3.5% year-on-year, below market expectations.
Meanwhile, core inflation came in at 2.6%, with prices declining 0.4% from the previous month, the largest monthly drop since May 2020. Lower energy costs drove the decline in headline inflation, with the energy index falling 5.7% in June.
The softer inflation figures lowered expectations for a rate hike from the Federal Reserve. According to the CME's FedWatch tool, the probability of a rate hike at the July meeting fell to 15.5%, down from 41.7% a day earlier.
Mohamed El-Erian, Chief Economic Advisor at Allianz, said on Tuesday that the lower inflation figures “should help temper what had become an excessively hawkish market tilt to the monetary policy outlook.” However, he warned that the softer print “won't fully resolve the debate over the forward-looking relevance of these numbers.”
However, markets reacted positively to the lower inflation figures, with chipmaking stocks such as Nvidia Corp. (NVDA) and Micron Technology (MU) surging at close.
Additionally, Fed Chairman Kevin Warsh testified before Congress on Tuesday, telling lawmakers that he expects the inflationary surge that has defined the past five years to fade into history.
Economist Peter Schiff said in a post on X on Tuesday that “The only way regime change at the Fed will reduce inflation is if we also get regime change in Congress and the White House. Monetary and fiscal policy have worked hand in glove to create the inflation that plagues the economy. Ending it requires huge cuts to government spending.”
Meanwhile, shares of U.S. banks surged on Tuesday after they reported second-quarter (Q2) results. Goldman Sachs (GS) led the climb, surging 9% at close after it reported record Q2 results. JPMorgan Chase (JPM) and Bank of America (BAC) also surged about 2% each following their Q2 prints.
On the geopolitical front, the U.S. continued to bomb Iran while imposing a naval blockade. However, U.S. President Donald Trump dropped his demand for ships passing through the Strait of Hormuz to pay a protection fee.
“At 3 p.m. ET today, U.S. Central Command forces began launching an additional round of strikes against Iran to continue degrading Iranian capabilities used to attack commercial shipping in the Strait of Hormuz. The strikes are taking place as American forces prepare to resume the naval blockade against Iranian ports and coastal areas. The blockade goes into effect at 4 p.m. ET,” the U.S. Central Command said in a post on X.
Trending Stocks To Watch
International Business Machines Corp. (IBM): Shares of the company plummeted more than 25% on Tuesday after the tech giant reported preliminary second-quarter results that fell short of market expectations.
Applied Digital Corp. (APLD): The neocloud company jumped onto the retail radar amid a sell-off in AI infrastructure names due to broader market volatility and a yearlong data center ban in New York.
SK Hynix Inc. (SKHY): The South Korean chip company garnered attention after a 27% surge in its share price following Barclays' initiation of coverage with an ‘Overweight’ rating.
Nebius Group N.V. (NBIS): Shares of the company fell alongside other AI infrastructure and data center stocks after New York Governor Kathy Hochul imposed a statewide moratorium on new hyperscale data centers for up to a year amid environmental concerns.
Global Market Trends
Crude oil prices continued to climb late Tuesday. At the time of writing, Brent crude futures expiring in September were up more than 1%, trading at $85.70 per barrel, while WTI crude futures expiring in August rose 0.97% to $80.11 per barrel.
Yields on the 10-year Treasury rose to 4.592% at the time of writing, while spot gold prices fell to around $4,031.65 per ounce.
Asian markets were trading higher on Wednesday, with South Korea's KOSPI leading the climb, up nearly 7% at the time of writing. Japan’s Nikkei 225, China’s SSE Composite index and Australian stocks were also trading higher at the time of writing.