Stocks opened cautiously higher Tuesday as market participants took in the latest inflation data and the unofficial start of second-quarter earnings season. But enthusiasm waned as the session wore on, with two of the three main benchmarks closing in negative territory.
Ahead of the open, data from the Bureau of Labor Statistics showed the Consumer Price Index (CPI) rose 0.3% month over month in June and 2.7% year over year. This was quicker than what was seen in May but in line with economists' forecasts.
Core CPI, which excludes volatile food and energy costs, was also higher than the month prior, but matched consensus estimates.
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Some "goods" areas, such as furniture, appliances and electronics, saw rising prices and were likely a result of tariff pass-throughs, says John Luke Tyner, portfolio manager and fixed income analyst at Aptus Capital Advisors.
As for the positives in the June CPI report, Tyner points to "continued softening in shelter, car insurance and airfares," which helps "alleviate service pressures that have been problematic over the last several years."
Tyner adds that while tariffs haven't lifted inflation as much as feared just yet, it's still above the Federal Reserve's 2% target and is unlikely to change the central bank's stance on keeping interest rates unchanged.
Indeed, futures traders are currently pricing in a 97% chance the Fed holds rates steady at its next policy meeting in late July.
MP Materials jumps on big Apple deal
In single-stock news, MP Materials (MP) shares soared 20.0% after the mining company announced a $500 million deal with Apple (AAPL).
Under the terms of the agreement, MP will provide the tech giant with rare earth magnets that are manufactured in the U.S. from 100% recycled materials.
MP Materials is the only rare earth producer in the U.S., and the magnets are critical in consumer electronics, including smartphones and computers.
"This collaboration deepens our vertical integration, strengthens supply chain resilience, and reinforces America's industrial capacity at a pivotal moment," said MP Materials CEO James Litinsky.
Nvidia rally sends Nasdaq to new high
Apple, for its part, rose 0.2% – but it was hardly the best blue chip stock today. That honor went to Nvidia (NVDA), which rallied 4.0% on news the semiconductor manufacturer will be allowed to sell its H20 artificial intelligence (AI) chips in China.
NVDA shares went into a tailspin earlier this year after the Trump administration ramped up restrictions on China. But the chip stock has rebounded in recent months and last week, became the first company to top a $4 trillion market cap.
Nvidia's gain helped keep the Nasdaq Composite above water today, with the tech-heavy index climbing 0.2% to 20,677 – a new all-time closing high.
However, the Dow Jones Industrial Average shed 1% to 44,023 and the S&P 500 fell 0.4% to 6,243 due in part to weakness in financial stocks.
Bank stocks hold back the S&P 500
Among the day's most notable decliners was Wells Fargo (WFC), which plunged 5.5% after earnings.
While the big bank beat top- and bottom-line Q2 estimates, it lowered its full-year net interest income guidance.
"The good news was bad loans were down indicating more stable credit quality allowing for better than expected profits," says Brian Mulberry, senior client portfolio manager at Zacks Investment Management.
And while Mulberry says that weakness in the NII segment "is a concern in the short term," this pressure could lift if interest rates move lower later this year.
Wells Fargo wasn't alone in its post-earnings weakness. JPMorgan Chase (JPM, -0.8%) and BlackRock (BLK, -5.8%) also fell in the wake of their Q2 results.
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