Only 0.6% away from the historical high! CPI's mildness cannot hide the shadow of bank stock earnings reports, and the S&P 500 falls below 6,300 points
Dragged down by bank stocks, the S&P 500 index fell 0.4%, failing to break through 6,300 points, just 0.6% away from its all-time high. Bank earnings reports were mixed, with Wells Fargo and BlackRock seeing their stock prices drop by 5.5% and 5.9%, respectively. Although the Nasdaq 100 index rose by 0.1%, the overall market was pressured by declines in the financial, materials, and healthcare sectors. Analysts expect the S&P 500's second-quarter profits to grow only 2.5% year-on-year
According to Zhitong Finance APP, on Tuesday, the S&P 500 index fell for the second time in three trading days, mainly dragged down by financial stocks. The earnings data released by banks was mixed, and the optimistic report on CPI cooling failed to offset this impact.
The index dropped by 0.4%, having previously risen by 0.5% and briefly breaking through the significant 6300-point level after the opening bell. Meanwhile, the Nasdaq 100 index rose by 0.1%, setting a new closing record. The decline in bank stocks suppressed the overall market's upward momentum, with Wells Fargo (WFC.US) shares falling by 5.5% due to its lowered expectations for full-year net interest income. BlackRock (BLK.US) shares dropped by 5.9% as the investment company's net inflow in the second quarter fell short of analysts' expectations.
Out of the 11 sectors in the S&P 500 index, 10 sectors declined, with financial, materials, and healthcare stocks leading the losses, while technology stocks rose. All 24 stocks in the KBW Bank Index fell—except for Citigroup (C.US). Citigroup shares rose by 3.7% as traders capitalized on market volatility caused by trade tariffs, achieving the best second-quarter performance in the past five years. JPMorgan Chase (JPM.US) shares fell by 0.7%, despite its investment business revenue unexpectedly showing a slight increase in the most recent quarter.
The S&P 500 index is less than 0.6% away from its all-time high, as traders prepare for the weakest earnings season since mid-2023 while also assessing the tariff uncertainties brought about by the Trump trade war. Data shows that analysts expect the S&P 500 index's profits in the second quarter to grow only 2.5% year-on-year; the full-year growth expectation has been revised down from 9.4% in early April to 7.1%.
Several other representative companies will report earnings this week, with Goldman Sachs (GS.US), Morgan Stanley (MS.US), and Bank of America (BAC.US) set to announce their results in the coming days.
In early trading of U.S. stocks, the market rose. The report from the U.S. Bureau of Labor Statistics showed that CPI inflation data was relatively mild, which is a favorable signal for the Federal Reserve as it considers further rate cuts in 2025. The core CPI, excluding the more volatile food and energy components, rose by 0.2% month-on-month in June, below the market expectation of 0.3%.
Chris Zaccarelli, Chief Investment Officer of Northlight Asset Management, wrote: "If inflation is indeed under effective control, then the Federal Reserve can begin to lower interest rates—possibly even taking action in September. But if subsequent reports present a different situation, then the Federal Reserve will have to further delay action." It is worth noting that NVIDIA (NVDA.US) stock price rose by 4% as the company plans to resume sales of its H20 artificial intelligence chips in the Chinese market after receiving assurances from Washington that the shipment of H20 chips will be approved. Semiconductor company stocks also rose alongside NVIDIA, including AMD (AMD.US) and Broadcom (AVGO.US). The Philadelphia Semiconductor Index increased by 1.3%. The Chicago Board Options Exchange Volatility Index hovered around 17.3.
In other markets, Apple Inc. (AAPL.US) stock price rose by 0.2%. The company has just reached a $500 million agreement to purchase rare earth minerals from MP Materials Corp. (MP.US). MP Materials Corp. is a U.S. producer that just received support from the Pentagon last week. A basket index tracking the so-called "seven giants" stocks, including Alphabet (GOOGL.US) and Meta (META.US), rose by 0.4%.
Among other standout stocks, Trade Desk (TTD.US) stock price increased by 6.6%. This came after S&P Dow Jones Indices announced that the advertising technology company will join the S&P 500 Index before the market opens on July 18. Meanwhile, the stock prices of wound care product manufacturers fell as the U.S. government proposed changes to the payment method for skin substitutes. MiMedx Group (MDXG.US) stock price dropped by 6.9%, and Organogenesis (ORGO.US) stock price fell by 10%
