US stocks opened higher on Tuesday after softer-than-expected June inflation data reduced expectations of an immediate Federal Reserve rate hike.
Investors also assessed second-quarter earnings from major US banks and corporate results, while keeping an eye on rising oil prices following renewed tensions in the Middle East.
The S&P 500 rose about 0.12%, while the Nasdaq Composite gained around 0.44%.
The Dow Jones Industrial Average slipped roughly 0.29%, pressured by IBM.
The Labor Department reported that the consumer price index (CPI) rose 3.5% year over year in June, below economists’ expectations of 3.8%.
On a monthly basis, CPI fell 0.4%, compared with forecasts for a smaller decline.
Following the report, traders significantly lowered expectations for a near-term interest rate increase.
Market pricing showed the probability of a rate hike at the Federal Reserve’s upcoming meeting falling sharply, although expectations for a September increase remained elevated.
Investors are also awaiting Federal Reserve Chair Kevin Warsh’s semiannual monetary policy testimony before Congress later in the day for further clues on the central bank’s policy outlook.
IBM sinks as earnings season begins
Corporate earnings remained a key focus as Wall Street’s second-quarter reporting season gathered pace.
IBM shares plunged more than 25% in trading after the technology company forecast preliminary second-quarter revenue below analysts’ expectations and warned that profits would fall short because of weaker demand across its software and infrastructure businesses.
The weakness spilled over to other software companies.
Oracle declined 0.79%, while ServiceNow and Accenture each fell more than 5% in trading.
Meanwhile, major US banks were trading up after reporting better-than-expected quarterly profits.
Goldman Sachs rose 4.2% after stronger dealmaking activity and increased market volatility helped drive record performance in its equities trading business.
Shares of JPMorgan Chase, Citigroup, Bank of America and Wells Fargo all traded higher after posting second-quarter earnings that exceeded analyst expectations.
Investors are closely watching earnings reports for signs of corporate resilience after the S&P 500’s strong rally this year, with analysts expecting second-quarter earnings growth of nearly 24% for the index.
Chip stocks rebound as oil prices remain elevated
Semiconductor stocks recovered after Monday’s sharp sell-off, helping lift the technology-heavy Nasdaq index.
The iShares Semiconductor ETF climbed about 3.6% in trading.
The VanEck Semiconductor ETF also advanced more than 2.7%.
Among individual chipmakers, Applied Materials gained more than 4.11%, while Teradyne rose about 5.8%.
Lam Research and Micron Technology each climbed more than 4%, and STMicroelectronics added over 2.9%.
Despite the rebound in technology shares, gains across the broader market remained limited as oil prices stayed elevated.
US crude traded above $80 a barrel, while Brent crude rose more than 4% to above $86 a barrel after President Donald Trump announced plans to reinstate a blockade on Iranian shipping through the Strait of Hormuz.
The announcement followed renewed military exchanges between the United States and Iran and renewed concerns about global energy supplies.
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