Weaker-Than-Expected Inflation Data May Lead To Rebound On Wall Street

The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to regain ground after moving notably lower in the previous session.

The futures advanced following the release of a closely watched Labor Department report showing consumer prices in the U.S. decreased by much more than expected in the month of June.

The Labor Department said its consumer price index fell by 0.4 percent in June after climbing by 0.5 percent in May. Economists had expected consumer prices to edge down by 0.1 percent.

The report also said the annual rate of consumer price growth slowed to 3.5 percent in June from 4.2 percent in May, coming in below economist estimates for a 3.8 percent jump.

Meanwhile, the Labor Department said core consumer prices, which exclude food and energy prices, came in unchanged in June after rising by 0.2 percent in May. Economists had expected core prices to increase by another 0.2 percent.

The annual rate of growth by core consumer prices slowed to 2.6 percent in June from 2.9 percent in May, while economists had expected the pace of growth to slip to 2.8 percent.

The data is likely to ease recent concerns about the outlook for inflation and the possibility of higher interest rates.

Technology stocks are likely to see a significant rebound after tumbling on Monday, as reflected by the 1.2 percent jump by the tech-heavy Nasdaq 100 futures.

However, a steep drop by shares of IBM Corp. (IBM) is likely to weigh on the Dow, with the tech giant plummeting by 22.1 percent in pre-market trading.

The nosedive by IBM comes after the company reported preliminary second-quarter results that fell short of expectations.

Stocks showed a notable move to the downside during trading on Monday, giving back ground following the upward move seen over the two previous sessions. The major averages all moved lower, with the tech-heavy Nasdaq showing a significant pullback.

The Nasdaq and the S&P 500 ended the day just off their lows of the session. The Nasdaq slumped 408.43 points or 1.6 percent to 25,873.18 and the S&P 500 slid 60.05 points or 0.8 percent to 7,515.34. The narrower Dow posted a more modest loss, dipping 138.37 points or 0.3 percent to 52,498.64.

The pullback by stocks came amid a sharp increase by the price of crude oil, with U.S. crude oil futures soaring by nearly 9 percent amid the continued exchange of attacks between the U.S. and Iran.

U.S. Central Command said it completed a new wave of offensive strikes against Iran on Sunday, hitting dozens of targets at multiple locations with precision munitions.

Tehran responded by attacking Gulf Arab states, including Bahrain, Kuwait, Qatar, Jordan and Oman, further straining the fragile ceasefire between the two countries.

President Donald Trump claimed in a post on Truth Social that the crucial Strait of Hormuz remains open but said he is reinstating the U.S. blockade of Iranian ports.

Trump also said the U.S. would be reimbursed at a rate of 20 percent on all cargo shipped through the strait as the U.S. serves as the “Guardian of the Hormuz Strait.”

A steep drop by shares of SK Hynix (SKHY) also weighed on the tech sector, with U.S.-listed shares of the South Korean chipmaker plunging by more than 9 percent after soaring by more than 13 percent during its debut last Friday.

Semiconductor stocks saw substantial weakness amid the slump by SK Hynix, with the Philadelphia Semiconductor Index plunging by 4.8 percent.

Considerable weakness is also visible among computer hardware stocks, as reflected by the 3.3 percent slump by the NYSE Arca Computer Hardware Index.

Airline, gold and networking stocks also saw significant weakness, while energy stocks moved sharply higher along with the price of crude oil.

Commodity, Currency Markets

Crude oil futures are surging $1.94 to $80.08 a barrel after soaring $6.73 to $78.14 a barrel on Monday. Meanwhile, after plunging $108 to $4,005.70 ounce in the previous session, gold futures are jumping $96.60 to $4,102.30 an ounce.

On the currency front, the U.S. dollar is trading at 161.75 yen compared to the 162.42 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1448 compared to yesterday’s $1.1381.

Asia

Asian stocks ended mostly higher on Tuesday, reversing early losses as upbeat Chinese trade data helped offset concerns over escalating military clashes between the United States and Iran.

Brent crude prices jumped nearly 3 percent toward $86 a barrel, bringing gains for the week to more than 10 percent after U.S. President Donald Trump reimposed a blockade on Iranian ships transiting the Strait of Hormuz and proposed imposing a 20 percent fee on all cargo passing through the vital waterway for guarding it.

The U.S. dollar eased ahead of the release of U.S. inflation data as well as Fed Chair Kevin Warsh’s testimony before Congress that could shape the outlook for interest rates.

Gold traded higher at $4,027 an ounce after falling around 3 percent to hit a two-week low on Tuesday amid hawkish Fed bets.

Money markets are pricing in nearly a 50 percent probability of a Federal Reserve rate hike in July after Governor Christopher Waller expressed caution about inflation and said a hot core inflation reading this week could prompt the FOMC to consider tightening policy at its late-July meeting.

China’s Shanghai Composite Index surged 1.4 percent to 3,967.13 after June trade data smashed forecasts. Hong Kong’s Hang Seng Index closed up 0.5 percent at 24,340.73.

Customs data released earlier today showed that Chinese exports rose 27 percent year-on-year in June, the fastest since 2021, while imports jumped 36 percent to a five-year high despite lingering global uncertainties.

China will release industrial output and retail sales for June along with GDP data for the second quarter on Wednesday. Analysts expect economic growth to have slowed to 4.5 percent from 5 percent in the first quarter.

Japanese markets reversed course to end higher, led by gains in semiconductor and tech shares, with SoftBank jumping 3.3 percent and Kioxia Holdings surging 3 percent.

The Nikkei 225 Index dropped nearly 1,000 points intraday to hit a one-month low before rebounding to close 0.7 percent higher at 67,743.50. The broader Topix Index settled 0.8 percent higher at 4,038.98.

Seoul stocks experienced a dramatic “V” shaped rebound to close higher, led by technology stocks. Market bellwether Samsung Electronics rallied 3.3 percent and SK Hynix added 3.7 percent.

The Kospi plummeted over 5 percent to reach its lowest level since April 27 before recovering to close 0.7 percent higher at 6,856.83 after data showed China’s exports accelerated in June, driven by global demand for AI and technology.

Australian markets recovered from an early slide to end on a flat note, with energy and utility stocks outperforming.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index dropped 0.5 percent to 13,651.22, extending losses for a second consecutive session.

Europe

European stocks have moved mostly lower during trading on Tuesday as escalating Middle East tensions spooked markets.

Eurozone, U.S. and U.K. 10-year bond yields rose to eight-week highs as crude oil futures scaled a one-month high after the announcement of a renewed U.S. blockade of Iranian ports near the Strait of Hormuz.

Money markets are pricing in nearly a 50 percent probability of a Federal Reserve rate hike in July after Governor Christopher Waller expressed caution about inflation and said a hot core inflation reading this week could prompt the FOMC to consider tightening policy at its late-July meeting.

The German DAX Index is down by 0.8 percent, the French CAC 40 Index is down by 0.7 percent and the U.K.’s FTSE 100 Index is down by 0.4 percent.

Swiss engineering firm ABB has fallen after announcing it has made an investment in the start-up Gridcog for an undisclosed sum.

Norway’s DNB Bank has also shown a significant move to the downside in Oslo after reporting a slightly lower second-quarter profit.

Sweden’s Ericsson has also plummeted after it warned of weaker profitability in its networks business.

Emerging markets assets manager Ashmore has also slumped in London despite reporting quarterly net flows that came in ahead of expectations.

Likewise, British Land Company has also declined despite reporting strong leasing activity during the first quarter of its fiscal year 2027.

Meanwhile, energy giants BP Plc and Shell have jumped as Brent crude futures hit a one-month high on escalating U.S.-Iran tensions.

U.S. Economic News

Largely reflecting a sharp pullback in energy prices, the Labor Department released a report on Tuesday showing consumer prices in the U.S. decreased by much more than expected in the month of June.

The Labor Department said its consumer price index fell by 0.4 percent in June after climbing by 0.5 percent in May. Economists had expected consumer prices to edge down by 0.1 percent.

The report also said the annual rate of consumer price growth slowed to 3.5 percent in June from 4.2 percent in May, coming in below economist estimates for a 3.8 percent jump.

Meanwhile, the Labor Department said core consumer prices, which exclude food and energy prices, came in unchanged in June after rising by 0.2 percent in May. Economists had expected core prices to increase by another 0.2 percent.

The annual rate of growth by core consumer prices slowed to 2.6 percent in June from 2.9 percent in May, while economists had expected the pace of growth to slip to 2.8 percent.

Federal Reserve Chairman Kevin Warsh is scheduled to deliver his semiannual monetary policy report to Congress before the House Financial Services Committee beginning at 10 am ET.

At 12:40 pm ET, Federal Reserve Governor Michael Barr is due to speak on artificial intelligence before the Federal Reserve Board Annual Financial Inclusion Conference.

Barr is also scheduled to participate in a fireside chart on artificial intelligence and financial include at the Federal Reserve Board Annual Financial Inclusion Conference at 12:55 pm ET.

At 1 pm ET, Chicago Federal Reserve President Austan Goolsbee is due to participate in a moderated question-and-answer session before a Kenosha Area Business Alliance Business Lunch event.

Federal Reserve Governor Lisa Cook is scheduled to moderate a “Consumers, Artificial Intelligence, and Financial Inclusion: Balancing Opportunities and Challenges” discussion before the Federal Reserve Board Annual Financial Inclusion Conference at 1:30 pm ET.

At 2:55 pm ET, Federal Reserve Vice Chair for Supervision Michelle Bowman is due to spea on “Responsible Innovation and Financial Inclusion” before the Federal Reserve Board Annual Financial Inclusion Conference.