Stan Choe, AP Business Writer
NEW YORK (AP) – Most US stocks fell Tuesday after the latest inflation updates hurt Wall Street’s hopes for low interest rates.
The S&P 500 fell 0.4%, but last week it is still close to the best ever set as 90% of stocks in the index fell. The Dow Jones industrial average fell 436 points, or 1%.
However, tech stocks are outliers, with Nasdaq’s composite rising 0.2%, setting another record thanks to Nvidia, the most influential stock on the market.
The stock felt pressure from reports showing US inflation accelerated to 2.7% last month from 2.4% in May. Economists pointed to rising prices for clothing, toys and other things that tend to be imported from other countries. Their prices could rise due to the tariffs proposed by President Donald Trump to countries around the world.
“The first signs of tariff pass-through are beginning to be shown,” says Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
Certainly, the inflation reported on Tuesday morning wasn’t too far from what economists expected. and a fundamental measure of inflation that economists consider to be better predictors of future trends than fear.
Overall, this data helped to induce yo-yo several times in the bond market for Treasury yields.
Treasury yields for 2010 rose from 4.43% to 4.48% late Monday. The two-year Treasury yield, which tracks closer expectations about what the Federal Reserve will do with short-term interest rates, rose from 3.90% to 3.95%.
With further accelerated inflation, they have put on interest rates after cutting them late last year. That’s because lower fees can boost the economy and provide more fuel. Wall Street loves lower rates as it has higher prices for stocks and other investments and Trump himself wants to cut faster.
But Federal Reserve Chairman Jerome Powell has asserted he would like to wait for more data on how tariffs will affect the economy and inflation. Following Tuesday’s inflation report, traders are overwhelmingly betting that the Fed will cut key interest rates by the end of the year. However, according to data from CME Group, they have regained their bets on the number of potential cuts.
I’m not sure if Trump will follow the strict tariffs he proposed, or if the economy and financial markets show too much pain, he will turn over and retreat. The hope is that he will trade in advance beforehand to reach a trade deal with other countries, which is why Trump proposed to lower the air tariff rate.
Trump said Tuesday that he had signed a contract with Indonesia where he promised to buy energy, produce and planes from the United States. Trump also said imports from Indonesia, the fourth largest country in the world, face 19% tariffs, rather than the 32% he threatened previously.
On Wall Street, tech stocks were outliers and rose after Nvidia said the US government had assured the H20 chips would be licensed again and delivery would start soon. Nvidia’s 4% profit was a much stronger force in the S&P 500.
Earlier this year, Nvidia said US restrictions on chips used in artificial intelligence development cut billions of dollars in the first quarter of the year.
Meanwhile, the stocks of large US banks have been mixed following the latest earnings report.
JPMorgan Chase slipped 0.7% despite analysts reporting stronger profits than expected as CEO Jamie Dimon warned of risks to the economy due to tariffs and other concerns.
Citigroup rose 3.7% after a better profit report than expected. But Wells Fargo trimmed its forecast in a critical way that earned money, which followed itself a 5.5% drop.
The S&P 500 fell 24.80 points to 6,243.76. The Dow Jones industrial average fell from 436.36 to 44,023.29, while the Nasdaq composite rose from 37.47 to 20,677.80.
In the overseas stock market, indexes slipped in Europe after mixed sessions in Asia. Hong Kong’s index rose 1.6%, while Shanghai’s index fell 0.4%. Reports show that despite pressure from Trump’s tariffs, China’s economic growth has only dropped slightly quarterly.
AP Business Writer Yuri Kageyama contributed.
Original issue: July 15th, 2025 10:04am EDT
