Stock market today: S&P 500 falls as inflation, mixed bank earnings weigh

Investing.com-- The S&P 500 closed lower Tuesday, as an Nvidia-led surge in tech wasn’t enough to offset a slump in financials as Wall Street banks delivered mixed quarterly earnings.

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average fell 436 points, or 1%, the S&P 500 fell 0.4%, and the NASDAQ Composite gained 0.2% clinching a second-straight record close of 20,677.80.

U.S. CPI offers mixed picture; Trump reaches preliminary deal with Indonesia 

U.S. consumer prices grew at a faster-than-anticipated annualized pace in June, with the Labor Department’s headline consumer price index coming in at 2.7% in the twelve months to June, compared with expectations of 2.6% and May’s reading of 2.4%.

Month-on-month, the figure was 0.3%, up from 0.1% in May and in line with projections.

However, the data release had more positive news on an underlying basis, as the so-called "core" CPI, which strips out volatile items like food and fuel, grew 2.9% year-over-year, below the 3.0% expected, and 0.2% on a monthly basis, again below the 0.2% forecast.

"The passthrough of tariffs continues to be modest given businesses stocking up on pre-tariff inventories in addition to absorbing some of the costs in margins," said analysts at CIBC (TSX:CM) Economics. "However, those inventories are becoming thinner and we expect to see tariff passthrough ahead, which will keep the Fed on the sidelines for now."

The Federal Reserve has warned of the effects of Trump’s tariffs on domestic prices, with sticky inflation likely to keep the central bank from cutting interest rates in the near-term.

On the tariff front, meanwhile, Trump on Tuesday said he reached a early-stage trade deal with Indonesia that includes a 19% levy on the latter’s exports to the U.S. 

Banks lead second-quarter earnings season; Nvidia jumps after resuming H20 chip sales to China 

In the corporate sector, investors are wading through earnings from a host of big U.S. lenders.

These quarterly reports could provide a glimpse into how companies see returns evolving in the coming months against a backdrop of rising international trade tensions. 

JPMorgan Chase (NYSE:JPM) fell despite the banking giant’s trading revenue soaring in the quarter as investors seized opportunities and hedged risks in response to shifting U.S. tariff policies, even while quarterly profit fell, reflecting a difficult comparison to last year when the bank had recorded a one-time accounting gain. 

Wells Fargo (NYSE:WFC) stock fell after the lender cut its expectation for annual interest income, while BlackRock (NYSE:BLK) dropped despite the world’s largest asset manager’s assets under management rising to a record $12.53 trillion in the quarter.

Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS) will report on Wednesday. 

Other Wall Street majors, including Microsoft (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), United Airlines (NASDAQ:UAL), Netflix (NASDAQ:NFLX), American Express (NYSE:AXP), and 3M Company (NYSE:MMM) are also set to report earnings this week. 

Elsewhere, Nvidia (NASDAQ:NVDA) rose more than 4% after the AI leader said it will resume the sales of its H20 chip in China, and also announced a new graphical processing unit for Chinese markets.

The move comes as CEO Jensen Huang visits China after recently meeting with top U.S. officials, and follows an improvement in U.S.-China trade relations, after Washington recently lifted several chip technology export restrictions against China. 

Peter Nurse, Ambar Warrick contributed to this article