Nasdaq rises as cooler CPI lifts chips; Dow edges up

U.S. stocks rose Tuesday after a softer-than-expected June Consumer Price Index. The Nasdaq Composite gained 0.91% to 26,109.65, the S&P 500 rose 0.38% to 7,544.03 and the Dow Jones Industrial Average edged up 0.05% to 52,527.56.

The Labor Department reported the CPI fell 0.4% in June from May and annual inflation slowed to 3.5% year-over-year. Economists had expected a 0.2% monthly decline and 3.8% annual inflation. The data lowered the probability of an immediate rate increase; the CME FedWatch Tool showed an 83.4% chance the Federal Reserve will leave rates unchanged at its July meeting, up from 58.3% a day earlier. Traders still price in at least one 25-basis-point hike before year-end.

Semiconductor stocks led gains after recovering from a sharp sell-off in the prior session. The VanEck Semiconductor ETF rose about 2%. Applied Materials and Teradyne climbed roughly 4% each. Lam Research and Micron Technology gained about 5%, and STMicroelectronics moved up more than 2%.

IBM warned second-quarter profits would come in below expectations because of weak demand in its software and infrastructure units. The stock fell about 25%, the largest drag on the Dow for the day.

Major U.S. banks kicked off the second-quarter earnings season with mostly stronger-than-expected results. Goldman Sachs rose about 9% after reporting higher trading revenue and better deal activity. JPMorgan Chase and Bank of America each advanced more than 2% after posting earnings above analyst forecasts. Citigroup and Wells Fargo declined despite reporting quarterly results as investors focused on expense trends.

In congressional testimony, Federal Reserve Chair Kevin Warsh described “the inflation surge of the last five years” as “a thing of the past.”

Oil prices pulled back from session highs but finished higher on the day. U.S. crude settled up about 1.5% near $79 per barrel and Brent rose about 1.7% to trade above $84 per barrel. Prices eased after the White House withdrew a proposal to impose a 20% fee on ships transiting the Strait of Hormuz; markets also remained attentive to recent U.S. strikes on Iran.

Market pricing reflected the softer inflation report and the start of corporate earnings, with participants monitoring upcoming data, central bank policy expectations and geopolitical developments.