Stocks Settle Higher on Tame Inflation News

The S&P 500 Index ($SPX) (SPY) on Tuesday closed up +0.38%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.02%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.10%.  September E-mini S&P futures (ESU26) rose +0.35%, and September E-mini Nasdaq futures (NQU26) rose +1.05%. 

Stock indexes settled higher on Tuesday as bond yields fell on a better-than-expected US June CPI report.  The 10-year T-note yield fell -4 bp to 4.58%.  Also, upbeat comments from Fed Chair Warsh were supportive of stocks when he said the US economy is resilient, growing at a solid pace, and that the labor market is broadly stable. 

Semiconductor stocks rose on Tuesday, recovering some of Monday’s losses as South Korea’s Kospi Index closed up +0.73% after SK Hynix and Samsung Electronics rebounded.  Also, US bank stocks rallied after Goldman Sachs, JPMorgan Chase, Bank of America, and Wells Fargo & Co. reported better-than-expected Q2 earnings. However, software stocks retreated on Tuesday, led by a -24% plunge in IBM after it reported preliminary Q2 revenue that fell short of consensus. 

US Jun CPI eased to +3.5% y/y from +4.2% y/y in May, better than the +3.8% y/y expected.  Also, Jun core CPI eased to +2.6% y/y from +2.9% y/y in May, better than expectations of +2.8% y/y.

Fed Chair Warsh said the US economy is resilient, growing at a solid pace, and that the labor market is broadly stable and nominal wage growth is solid.  He added that the Fed has "no tolerance" for persistently high inflation.

Chicago Fed President Austan Goolsbee said Tuesday's CPI report was "surprisingly benign," though policymakers will need more than one month of data to assess if inflation is trending back to the Fed's 2% goal.

Better-than-expected Chinese trade data is supportive of global economic growth prospects after China's Jun exports rose +27.0% y/y, beating expectations of +19.0% y/y.  Also, Jun imports rose +36.0% y/y, stronger than expectations of +26.1% y/y and the biggest increase in 5 years.

On the negative side, WTI crude oil (CLQ26) rose more than +1% to a 1-month high, adding to Monday’s +9% surge, as the interim peace deal between the US and Iran effectively collapsed.  The US reimposed a naval blockade and launched another wave of airstrikes on Tuesday against Iran, while Iran attacked more oil tankers in Omani waters that were transiting the southern route of the Strait of Hormuz. The reinstatement of the blockade on Iranian ports may prompt Iran to step up attacks on ships seeking to transit the Strait of Hormuz. 

However, crude oil prices fell back from their highs after President Trump said he will replace the 20% US Reimbursement Fee for protecting the Strait of Hormuz with trade and investment deals he will be making with the various Gulf States.   

The outlook for strong Q2 earnings, which will begin this week, is a bullish factor for stocks.  Forecasts compiled by Bloomberg Intelligence suggest Q2 earnings may increase by +23%, close to Q1’s blowout earnings of +30%, which was more than double the +12% analysts had expected.  AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2. 

The markets are discounting a 17% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.

Overseas stock markets settled higher on Tuesday.  The Euro Stoxx 50 closed up +0.15%.  China's Shanghai Composite recovered from a 3.5-month low and closed up +1.36%.  Japan's Nikkei-225 Stock Average rebounded from a 1-month low and closed up +0.74%.

Interest Rates

September 10-year T-notes (ZNU6) on Tuesday closed up +7 ticks, and the 10-year T-note yield fell -4.7 bp to 4.577%.  Sep T-notes recovered from a 1.75-month low on Tuesday and moved higher, and the 10-year T-note yield fell from a 1.75-month high of 4.634%.  T-notes rallied on Tuesday due to a smaller-than-expected increase in June US consumer prices.  Also, comments on Tuesday by Fed Chair Warsh were bullish for T-notes, as he said the Fed has "no tolerance" for persistently high inflation.  T-notes initially moved lower on Tuesday amid stronger crude oil prices after WTI crude rose more than +1% to a 1-month high. 

European government bond yields moved higher on Tuesday.  The 10-year German bund yield climbed to a 1.75-month high of 3.144% and finished up +0.5 bp to 3.113%.  The 10-year UK gilt yield rose to a 1.75-month high of 5.048% and finished up +0.8 bp to 4.977%.

Swaps are discounting a 14% chance of a +25 bp ECB rate hike at its next policy meeting on July 23.

US Stock Movers

Chipmakers and AI-infrastructure stocks rebounded on Tuesday, recovering some of Monday’s selloff.   The iShares Semiconductor ETF (SOXX) closed up more than +2%.  Sandisk (SNDK) closed up more than +5%, and Nvidia (NVDA), Lam Research (LRCX), Micron Technology (MU), and Intel (INTC) closed up more than +4%.  Also, Applied Materials (AMAT), ASML Holding NV (ASML), KLA Corp (KLAC), and Microchip Technology (MCHP) closed up more than +3%, and Advanced Micro Devices (AMD), Seagate Technology Holdings Plc (STX), Marvel Technology (MRVL), and Texas Instruments (TXN) closed up more than +2%. 

Cybersecurity stocks moved higher on Tuesday.  CrowdStrike Holdings (CRWD) closed up more than +12% to lead gainers in the S&P 500 and Nasdaq 100, and Okta (OKTA) closed up more than +10%.  Also, Zscaler (ZS) closed up more than +7%, and Palo Alto Networks (PANW) closed up more than +6%.  In addition, Cloudflare (NET) closed up more than +4%, and Fortinet (FTNT) closed up more than +3%.

Mining stocks rallied on Tuesday with gold, silver, and copper prices sharply higher.  Southern Copper (SCCO) closed up more than +4%, and Freeport McMoran (FCX) closed up more than +3%.  Also, Coeur Mining (CDE) closed up more than +2%, and Newmont Corp (NEM), Hecla Mining (HL), and Barrick Mining (B) closed up more than +1%.

Software stocks retreated on Tuesday, led by a -25% plunge in International Business Machines (IBM) after it reported preliminary Q2 revenue that fell short of consensus.  Also, Atlassian Corp (TEAM) closed down more than -7%, and ServiceNow (NOW) closed down more than -5%.  In addition, Adobe Systems (ADBE) closed down more than -4%, and Workday (WDAY) closed down more than -3%.  Finally, Oracle (ORCL), Intuit (INTU), Thomson Reuters (TRI), Salesforce (CRM), and Autodesk (ADSK) closed down more than -2%, and Microsoft (MSFT) closed down more than -1%. 

Goldman Sachs Group (GS) closed up +9% to lead gainers in the Dow Jones Industrials after reporting Q2 equities and trading revenue of $7.42 billion, well above the consensus of $5.02 billion.

O-I Glass (OI) closed down more than -12% after Bank of America Global Research double-downgraded the stock to underperform from buy with a price target of $11. 

Biogen (BIIB) closed down more than 8% after its investigational Alzheimer’s therapy, diranersen, did not meet its primary endpoint of dose response, as higher doses did not provide greater clinical benefit.

CoStar Group (CSGP) closed down more than -4% after announcing a management change: Robin Rossman will replace Christian Lown as CFO, effective July 31. 

Earnings Reports(7/15/2026)

Bank of New York Mellon Corp/The (BNY), BlackRock Inc (BLK), Cintas Corp (CTAS), Conagra Brands Inc (CAG), Elevance Health Inc (ELV), First Horizon Corp (FHN), JB Hunt Transport Services Inc (JBHT), Johnson & Johnson (JNJ), M&T Bank Corp (MTB), Morgan Stanley (MS), PNC Financial Services Group Inc (PNC), Progressive Corp/The (PGR), United Airlines Holdings Inc (UAL).