Wall Street Gains Amid Inflation Data, Bank Earnings

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Stocks Plunge After Trump Confirms Tariffs on Canada & Mexico

Wall Street Gains Amid Inflation Data, Bank Earnings/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Wall Street started Tuesday in positive territory as inflation data matched expectations and big banks reported mixed but mostly upbeat earnings. Investors balanced optimism against ongoing trade tensions driven by President Trump’s tariff threats. Meanwhile, global markets faced volatility amid Japanese election jitters and shifting bond yields.

Wall Street Market Update Quick Looks

U.S. inflation rose 0.3% in June, matching forecasts
S&P 500 opens 0.5% higher; Nasdaq jumps 0.9%
JPMorgan, Citigroup post strong results, Wells Fargo disappoints
Investors expect ~60% chance of Fed rate cut in September
Trump threatens new 30% tariffs on EU, Mexico
Japanese government bond yields hit highest levels since 2008
China’s Q2 economic slowdown milder than expected
Gold rises; oil prices remain largely flat

Deep Look

Wall Street Rallies as Inflation and Bank Earnings Steer Markets Amid Global Uncertainty

New York — U.S. stocks opened firmly higher on Tuesday, fueled by reassuring inflation data and a series of largely positive earnings reports from major American banks. Investors were cautiously optimistic despite lingering concerns over trade tensions and shifting political landscapes abroad.

The S&P 500 climbed 0.5% in early trading, while the Nasdaq surged 0.9% following the release of U.S. consumer price data showing a 0.3% increase in June. This uptick was broadly in line with economists’ forecasts but represented the steepest monthly gain since January.

“Markets are breathing a sigh of relief,” said Nick Rees, head of macro strategy at Monex Europe. “While inflation is higher, it’s not wildly above expectations. This gives the Federal Reserve room to maneuver, even though uncertainty remains high.”

Inflation Holds Steady, Fed Debate Continues

The latest Consumer Price Index data signaled the potential start of tariff-driven inflation pressures, yet fell short of delivering a shock that might force the Federal Reserve into a more hawkish stance. Investors continued to price in roughly a 60% chance that the Fed might lower interest rates in September.

Benchmark 10-year U.S. Treasury yields eased about 2 basis points to 4.41%, reflecting tempered inflation fears.

Rees noted the data has set the stage for further clashes between the Federal Reserve and President Donald Trump. “This gives enough reason for the Fed to pause, but also enough fuel for Trump to keep pushing for rate cuts,” he said.

Trump has vocally criticized Fed Chair Jerome Powell, insisting interest rates should be significantly lower to stimulate growth.

Bank Earnings Deliver Mixed Signals

Investor sentiment also hinged on earnings from major U.S. banks. JPMorgan Chase, Citigroup, and Wells Fargo all released quarterly results exceeding Wall Street’s forecasts, though market reactions were mixed:

JPMorgan Chase rose about 1% after posting robust profits.
Citigroup shares climbed 3% following better-than-expected revenue.
Wells Fargo fell 3% after the bank trimmed its guidance for 2025 net interest income, signaling caution in the face of potential economic headwinds.

Overall, S&P 500 companies are projected to post a 5.8% year-over-year earnings increase, according to LSEG data. That’s a sharp drop from the 10.2% growth forecast earlier this year, before Trump reignited trade tensions.

Trump’s Trade War Escalates

Global trade once again dominated market headlines after President Trump threatened to impose sweeping 30% tariffs on goods from the European Union and Mexico starting August 1. That’s an increase from the 20% tariff proposed in April. Trump’s remarks unsettled investors, though he signaled openness to negotiations that might avert the steepest duties.

“On the surface, Trump’s latest tariff threat looks worse than expected,” said Andrzej Szczepaniak, senior Europe economist at Nomura. “But investors increasingly see these statements as bargaining tools rather than concrete policy shifts.”

Meanwhile, Japan is reportedly seeking high-level talks with the U.S. this Friday in a bid to ease tensions and avoid further trade disruptions.

Japanese Politics Roil Global Bond Markets

Beyond the U.S., political turmoil in Japan also influenced global markets. An upcoming election for Japan’s upper house has cast doubt on the ruling coalition’s ability to maintain power. Opposition parties, favoring higher government spending, are gaining ground in polls.

Fears over Japan’s fiscal stability sparked a sell-off in Japanese government bonds, pushing the benchmark 10-year yield to 1.595%, the highest level since October 2008. Rising Japanese yields contributed to upward pressure on long-term yields in Europe and the U.S. in recent days, though Germany’s 30-year yield eased 6 basis points Tuesday to 3.19%.

China’s Economy Shows Resilience

In Asia, data showed China’s economy slowed less than anticipated in the second quarter, suggesting resilience in the face of ongoing U.S. tariffs. The milder slowdown offered a modest boost to investor sentiment across Asian markets.

Global Markets React

Europe’s Stoxx 600 index climbed 0.3%, while U.S. futures took additional support from news that tech giant Nvidia plans to resume sales of its H20 chips to China, sending its shares up roughly 4% in premarket trading.

Currency markets were relatively subdued. The euro held steady at $1.1665, while the U.S. dollar gained 0.4% against the Japanese yen. Gold advanced 0.3% to $3,351 per ounce, and silver was flat after hitting its highest mark since September 2011 the previous session.

Oil prices hovered near flat, with Brent futures trading at $69.18 per barrel and U.S. crude at $67.00.

Looking Ahead

While Wall Street’s Tuesday gains reflect cautious optimism, investors remain watchful. Trade tensions, political uncertainty, and the Federal Reserve’s next moves will continue to drive market sentiment in the weeks ahead.

“Equities are resilient,” Rees said. “But it’s still a market walking a tightrope between optimism over earnings and the real risks posed by trade wars and political volatility.”