SP 500 and Nasdaq rise on cooling inflation and strong bank earnings
US markets gain as inflation data and banking sector performance boost investor confidence.
1Market rally gains momentum
US stocks advanced as June inflation data came in below expectations and major banks reported strong earnings. The SP 500 rose 0.38% while the tech-heavy Nasdaq gained 0.91%. Investors interpreted the data as reducing pressure for aggressive Fed rate hikes, with odds of a July pause jumping to 83%.
2Inflation cools more than expected
The Consumer Price Index showed slower inflation in June, driven by easing energy prices. This development pushed market expectations for a July rate pause from 58% to 83%. Traders now anticipate only one 25-basis-point hike by year-end, according to CME's FedWatch tool.
3Fed Chair signals inflation control
In his congressional testimony, Fed Chair Kevin Warsh outlined plans to combat inflation while suggesting rate hikes might not be necessary. However, tensions in the Strait of Hormuz continue to pressure oil prices, maintaining some inflationary concerns in energy markets.
4Banking sector starts strong
Earnings season kicked off with Goldman Sachs, JPMorgan Chase and Bank of America exceeding profit expectations. Strong trading and investment banking performance indicated healthy consumer fundamentals, though Citigroup and Wells Fargo shares declined amid expense concerns.
5Tech leads market gains
A semiconductor rebound drove Nasdaq's outperformance, though IBM shares tumbled after revenue warnings. Investors now await earnings reports from major tech companies in coming weeks, which could further influence market direction during the summer trading period.
6Shifting market dynamics
The inflation report and banking earnings have boosted summer market confidence. However, Middle East geopolitical risks and energy price volatility could still impact Fed policy decisions. Market participants now focus on corporate earnings guidance and consumer spending trends for clearer signals.
Original article: Economic Times — SP 500 ve Nasdaq enflasyon verisi ve banka karlarıyla yükseldi