S&P500: Index Edges Higher as CPI Meets Forecast and Nvidia Boosts Tech Stocks

S&P 500 Futures Edge Higher as CPI Meets Forecasts and Nvidia Gains on China Sales Update

U.S. equity futures ticked higher early Tuesday after June’s Consumer Price Index (CPI) matched forecasts and Nvidia rallied on news it will resume AI chip sales to China.

The S&P 500 futures rose 0.3%, while Nasdaq 100 futures gained 0.6%. Dow futures lagged, down 83 points, pressured by financial sector weakness despite a mixed earnings batch.

The CPI increased 0.3% in June, with annual inflation running at 2.7%, in line with expectations. Core CPI, which strips out food and energy, rose 0.2% monthly and 2.9% annually.

Market focus remains on disinflation progress, especially as month-over-month readings have consistently surprised to the downside over the last five months.

Is the Fed Getting Closer to a Rate Cut After CPI Data?

June’s inflation report strengthened the case for a Federal Reserve rate cut later this year. Core CPI cooled to 2.9% annually, matching estimates, while the month-over-month figure came in slightly below expectations. Traders are now pricing in over an 80% chance of a September rate cut, according to CME FedWatch. Lower Treasury yields followed the report, giving further support to equity valuations.

Wells Fargo strategist Scott Wren noted the consistent downside surprises in monthly CPI readings as particularly meaningful, likely reinforcing the Fed’s confidence in progress toward its 2% inflation goal.

Nvidia Leads Tech Stocks Higher on Positive China Update

Nvidia surged 4% premarket after confirming it will soon restart sales of its H20 AI chips to China. The U.S. government has pledged to grant the necessary licenses. The news lifted other chipmakers as well, with AMD up 5%, Micron rising 2%, and Broadcom adding 1%. Trade Desk soared 14% after being added to the S&P 500, while Robinhood and AppLovin dropped around 1% each after being left out.

Financial Sector Mixed as JPMorgan, Wells Fargo, and Citigroup Report

Earnings from major banks painted a mixed picture. Wells Fargo beat on profit but lowered net interest income guidance, sending shares down 3%. JPMorgan edged 0.3% lower despite strong trading and investment banking results. Citigroup rose nearly 1% after topping estimates. BlackRock slipped 3% after missing revenue expectations, while Bank of New York Mellon beat across the board but failed to impress investors.

State Street dipped 2% after reporting weaker-than-expected net interest income. Albertsons edged higher on reaffirmed guidance, and National Fuel Gas jumped 4% on a bullish double upgrade from Bank of America.

Market Outlook: Can Earnings Fuel a Breakout?

With inflation showing signs of continued moderation, the focus now shifts to earnings season. S&P 500 companies are expected to post 4.3% year-over-year earnings growth, the slowest since Q4 of last year.

Traders are watching to see whether results can justify record-high valuations. Key reports from tech giants and consumer names in the coming weeks will determine whether this rally sustains or stalls.

More Information in our Economic Calendar.