The S&P 500 and Nasdaq opened higher on Tuesday after June inflation came in cooler than expected, easing pressure on the Federal Reserve. The Dow fell at the open even as major banks posted strong second-quarter results.
The S&P 500 rose 21.4 points, or 0.28%, to 7536.7 at Tuesday's open, as softer-than-expected inflation fueled bets that the Federal Reserve could take a less hawkish stance on rates. The Nasdaq Composite rose 142.3 points, or 0.55%, to 26015.492, while investors weighed second-quarter results from major U.S. banks.
The move split the indexes. The Dow Jones Industrial Average fell 452.3 points, or 0.86%, to 52046.36 at the open, diverging from the two benchmarks that climbed on the inflation print.
The reaction traced back to the June inflation report. Consumer prices rose 3.5% in June from a year earlier, according to the Bureau of Labor Statistics, below economists' expectations of 3.8% and down from May's 4.2% reading. Core prices, which strip out food and energy, were unchanged on the month and up 2.6% over the year, also under expectations.
That reading is likely to take some pressure off the Fed, which has grown more focused on inflation. Ahead of the report, bond traders had increased their bets that the central bank would hike interest rates at its July 28-29 meeting. Traders saw a 43% chance of a 25 basis point hike, up from 25% a week earlier, according to CME Group's FedWatch.
Second-quarter reports from JPMorgan, Bank of America, Wells Fargo, Citigroup, and Goldman Sachs pointed to a robust quarter for Wall Street profits and trading. JPMorgan said profits jumped 41% to $21.2 billion, or $7.70 per share, far exceeding the $5.64 analysts had expected.
According to Yahoo Finance, CEO Jamie Dimon attributed the results to "a particularly favorable environment with an elevated level of market activity".
Sources: Investing.com, Yahoo Finance
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