The S&P 500 Index ($SPX) (SPY) rose +0.38%, the Dow Jones Industrial Average ($DOWI) (DIA) advanced +0.07%, and the Nasdaq 100 Index ($IUXX) (QQQ) gained +0.97%. September E-mini S&P futures (ESU26) increased +0.30%, while September E-mini Nasdaq futures (NQU26) surged +0.97%. This upward movement followed the release of better-than-expected U.S. June CPI data, which showed y/y inflation slowed to +3.5% (from +4.2% in May), beating expectations of +3.8%. The 10-year Treasury yield fell five basis points to 4.57%, reflecting progress on inflation control.
Semiconductor stocks rebounded, recovering Monday’s losses after South Korea’s Kospi Index closed +0.73% following gains from SK Hynix and Samsung Electronics. U.S. bank stocks also rose as Goldman Sachs, JPMorgan Chase, Bank of America, and Citigroup reported strong Q2 earnings. However, software stocks declined, led by IBM’s -24% drop after Q2 revenue fell short of estimates.
The Federal Reserve Chair emphasized the U.S. economy’s resilience, noting solid growth and a stable labor market with robust nominal wage gains. The Fed reiterated its “no tolerance” stance toward persistent inflation. Positive Chinese trade data further supported global growth, with exports rising +27% y/y (exceeding +19% expectations) and imports up +36% y/y (vs. +26.1% anticipated).
Bullish Q2 earnings forecasts, with projected EPS growth of +23%, drove investor confidence. AI-driven earnings—particularly from AI infrastructure stocks contributing nearly 60% of the S&P 500’s EPS growth—were key contributors. Meanwhile, OPEC+ tensions resurfaced as U.S. crude oil prices (WTI) surged +1% to a monthly high after tensions over the Strait of Hormuz escalated. Iran’s renewed attacks on oil tankers and U.S. naval deployments risked disrupting shipping, though President Trump pledged to protect the waterway at a 20% reimbursement rate.
Markets priced in a 12% probability of a 25-basis-point rate hike at the July 28-29 FOMC meeting. Overseas markets were mixed: the Euro Stoxx 50 fell -0.02%, while China’s Shanghai Composite rebounded +1.36% and Japan’s Nikkei-225 rose +0.74%.
Interest Rates: September 10-year T-notes (ZNU6) climbed +11 ticks as yields dropped -5.6 bp to 4.567%, unbolted from crude oil pressures. European yields were volatile, with German bunds hitting a 1.75-month high at 3.112% and U.K. gilts falling -0.1 bp to 4.968%.
U.S. Stock Movers: Semiconductor and AI-infrastructure stocks (SOXX +2.5%) led gains, supported by Lam Research (LRCX +3.2%), Micron (MU +2.8%), and AMD (AMD +2.3%). Cybersecurity firms like CrowdStrike (CRWD +9.1%) and Okta (OKTA +9.2%) topped gainers. Mining stocks rallied as gold, silver, and copper prices rose sharply, with Southern Copper (SCCO +4.1%) and Hecla Mining (HL +3.5%) leading.
Software losses continued, with IBM down -24%, Atlassian (TEAM -5.3%), and Workday (WDAY -4.7%). Energy Giant Goldman Sachs (GS +7.4%) outperformed on Q2 trading revenue of $7.42B vs. $5.02B estimates. CoStar (CSGP -5.2%) fell after a CFO change, while O-I Glass (OI -8.1%) dropped on a downgrade.