President Donald Trump rolled back his 20% toll on Strait of Hormuz shipping, though an off-and-on ceasefire in the Middle East continues to roil energy markets and interest rates. But consumer inflation was a lot cooler than expected in June, big banks beat Wall Street forecasts and even conflicting headlines suggest interest in the AI trade remains high.
The West Texas Intermediate crude oil futures contract traded above $80 per barrel for the first time since June 17 and was higher by 2.0% at $79.68 on Tuesday. The 2-year Treasury yield ticked down to 4.189% after reaching a new 52-week high and closing at 4.263% on Monday.
The Bureau of Labor Statistics (BLS) said before the opening bell that the Consumer Price Index (CPI) showed its biggest month-over-month decline since 2020 last month. The June CPI report attributed the move to the steepest slide for gasoline prices since 2022.
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Bloomberg, relying on “people familiar with the matter,” said South Korea-based Samsung Electronics plans to seek some of the same fortune SK Hynix (SKHY, -9.3%) found last Friday when it completed one of the biggest IPOs in U.S. history.
But Reuters quoted a company spokesperson: “Samsung Electronics is not reviewing the possibility of issuing American Depositary Receipts.” Samsung was up 3.4% on its local exchange, and the Korea Composite Stock Price Index was up 0.7% on Tuesday.
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Meanwhile, facing an array of challenges to his authority, new Fed Chair Kevin Warsh is testifying to Congress for the first time since taking his oath of office in May.
Warsh appeared before the House Financial Services Committee today and will testify to the Senate Banking Committee tomorrow about inflation and interest rates.
As Louis Navellier of Navellier & Associates notes, the BLS will release the Producer Price Index (PPI) before the opening bell on Wednesday. “Economists are expecting the overall PPI to decline 0.2% in June,” Navellier writes, “so it is widely expected that inflation will also be cooling on the wholesale level.”
At the closing bell on Tuesday, the tech-heavy Nasdaq Composite was up 0.9% to 26,107, the broad-based S&P 500 had climbed 0.4% to 7,543, and the blue-chip Dow Jones Industrial Average was higher by 0.02% to 52,508.
GS gets the biggest earnings bounce
Goldman Sachs (GS, +9.1%) was the top-performing Dow Jones stock on Tuesday after management of the heaviest component in the price-weighted index reported expectations-beating second-quarter revenue and earnings.
JPMorgan Chase (JPM, +2.5%) and Bank of America (BAC, +1.9%) also beat Wall Street forecasts and rose.
But Citigroup (C, -5.3%) and Wells Fargo (WFC, -2.5%) exceeded estimates and fell.
C opened higher, but CEO Jane Fraser said during the company’s intraday conference call that management is planning additional investments, as well as accelerated job cuts, that could lead to higher costs in the short term.
Wells Fargo, meanwhile, continues to recover after the removal of regulatory restrictions on its asset growth.
Another Black Tuesday for Big Blue
International Business Machines (IBM, -25.2%), which was founded in June 1911 and completed its initial public offering (IPO) in January 1962, had its worst trading day since at least 1968 on Tuesday.
IBM closed with its biggest single-day loss on record, exceeding the 23.7% decline on Black Tuesday, October 19, 1987, after CEO Arvind Krishna said in a letter to shareholders that Big Blue would miss its second-quarter revenue and earnings guidance.
Susquehanna analyst Jamie Friedman reiterated his Neutral (Hold) rating and his $303 12-month target price, citing IBM’s quantum computing option. “At the same time,” the analyst added, “the other dimensions of the business that comprise the vast majority of revenue are meeting headwinds.”
IBM is scheduled to report earnings on July 23.