Nasdaq leads Wall Street gains as US inflation cools

Wall Street stocks rose Tuesday after large US banks reported stronger profits and US inflation slowed more than expected, weighing on the dollar.

JPMorgan Chase led a series of major US lenders reporting higher profits, supported by financial markets and investment banking. Citigroup, Bank of America, Goldman Sachs and Wells Fargo also reported higher profits in the unofficial start of second-quarter earnings season. Shares in the banks ended mixed, but the Dow Jones Industrial Average edged up, while the S&P 500 and Nasdaq Composite advanced.

The Nasdaq, which had led losses on Monday as oil prices rose after the latest Middle East flare-up, gained 0.9 percent to close at 26,107.01. The S&P 500 rose 0.4 percent to 7,543.59, and the Dow ended up less than 0.1 percent at 52,508.27.

Oil prices rose again Tuesday, but the increases eased after US President Donald Trump backed down from a threat to heavily tax ships passing through the Strait of Hormuz. Brent North Sea crude was up 1.7 percent at $84.73 a barrel around 2020 GMT, while West Texas Intermediate rose 1.5 percent to $79.34.

US consumer price data showed price pressure falling more sharply than analysts expected. The consumer price index rose 3.5 percent in June from a year earlier, down from 4.2 percent in May. The slowdown pulled inflation back from a three-year high, as lower energy costs more than offset increases in housing and food. Analysts surveyed by Dow Jones Newswires and The Wall Street Journal had expected a 3.8 percent increase.

Kathleen Brooks, research director at XTB, said the data marked the largest moderation in US price growth in six years and, in her view, sharply reduced the chance of a rate cut at this month's Federal Reserve policy meeting.

Newly installed Federal Reserve Chair Kevin Warsh told a House Financial Services Committee hearing that it was too early to declare success against inflation. He said Fed officials had “no tolerance” for stubbornly high prices and pledged to end what he called a years-long inflation surge.

The dollar fell against the euro and other major currencies as futures markets showed fewer traders expected a rate increase at the Fed's July 29 meeting. The euro rose to $1.1423 from $1.1381 on Monday. The pound rose to $1.3386 from $1.3348. The dollar fell to 162.18 yen from 162.43 yen, while the euro rose to 85.33 pence from 85.27 pence.

European markets were little changed overall. London's FTSE 100 rose 0.3 percent to 10,529.39, the Paris CAC 40 was flat at 8,366.39, and Frankfurt's DAX rose 0.1 percent to 25,147.03. Asian stocks mostly climbed, with Tokyo's Nikkei 225 up 0.7 percent at 67,743.50, Seoul's Kospi up 0.7 percent at 6,856.83, Hong Kong's Hang Seng Index up 0.5 percent at 24,340.73 and Shanghai's Composite up 1.4 percent at 3,967.13.

IBM shares fell more than 25 percent after the US technology company released disappointing preliminary second-quarter results. The company blamed a shift in customer spending linked to expected higher prices for memory chips and other AI-related infrastructure. IBM Chief Executive Arvind Krishna told investors the company had not adapted and moved quickly enough.