Cooling CPI and Hormuz Toll Reversal Lift Wall Street

The S&P 500 and Nasdaq rallied Tuesday as a softer-than-expected June CPI report cooled inflation fears and slashed the odds of a July rate hike to 17%. President Trump's surprise reversal of the Strait of Hormuz shipping toll triggered a powerful rebound in semiconductor stocks, lifting the Nasdaq 0.9%. JPMorgan and Goldman Sachs posted record quarterly profits, while IBM plunged 25% in its worst day ever.

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Inflation cools to 3.5%, slashing odds of July rate hike. The June CPI fell 0.4% from the prior month, bringing the annual inflation rate to 3.5%, well below the 3.9% consensus. The report prompted traders to slash the probability of a July rate hike to just 17%, fueling a broad stock market rally. 1 2 3 4

Trump reverses Strait of Hormuz toll, triggering chip rebound. President Trump reversed his 20% fee on ships crossing the Strait of Hormuz, replacing it with trade investment agreements after just one day. The news immediately sparked a rebound in semiconductor stocks, lifting the Philadelphia Semiconductor Index by 2.5%, with Nvidia up 4% and Micron climbing 5%. 5 6

IBM crashes 25% in record plunge on earnings warning. IBM issued preliminary second-quarter results showing revenue of $17.2 billion, well below the $17.86 billion consensus, as CEO Arvind Krishna cited a shift in corporate spending toward AI data-center hardware. The 25% drop was IBM's worst single-day loss in history, surpassing the 1987 Black Monday crash. 7 8

JPMorgan and Goldman Sachs post record profits on dealmaking boom. JPMorgan Chase earned $21.2 billion in net income, the highest quarterly profit for any U.S. bank, driven by a surge in IPOs and trading revenue. Goldman Sachs posted a 92% jump in profit to $6.6 billion, well above expectations, though CEO Jamie Dimon cautioned the environment is "close to as good as it gets." 9 10 11 12

Fed's Warsh stresses inflation fight in first congressional testimony. Delivering his first congressional testimony as Fed Chair, Kevin Warsh struck a hawkish tone on price stability but offered no forward guidance on interest rates. Markets broadly interpreted the cooler CPI data as strengthening the case to keep rates unchanged in July. 12