Wall Street calms, and stocks hold steadier after US inflation data comes in less bad than expected

New York, Jul 14 (AP) Stocks are holding steadier on a calmer Wall Street Tuesday after a report showed US inflation was not as bad last month as economists expected. That was even though oil prices continue to jump on worries that the United States and Iran may return to all-out war. The S&P 500 added 0.1 per cent to recover some of its 0.8 per cent loss from the prior day. The Dow Jones Industrial Average was down 96 points, or 0.2 per cent, as of 9:35 am. Eastern time, and the Nasdaq composite was 0.4 per cent higher. Stocks got help from easing yields in the bond market, which fell after a report said US consumers had to pay prices for gasoline, food and other costs of living that were 3.5 per cent higher last month than a year earlier. While that's more than nearly everyone would like, it wasn't as bad as May's 4.2 per cent inflation rate or the 3.9 per cent that economists expected for June. Less bad inflation could take pressure off the Federal Reserve, which is considering raising interest rates. Higher rates can keep a lid on inflation, but they also slow the economy and hurt prices for all kinds of investments. Following the inflation report, traders see less than a 17 per cent chance that the Federal Reserve will raise its main interest rate at its next meeting later this month. That's down from the nearly 42 per cent probability seen the day before, according to data from CME Group. The drop in yields could also bring in rates for mortgages and other loans going to US households and businesses. That helped stocks of several companies in the housing industry to strengthen. Builders FirstSource, which sells countertops, windows and other building materials, rose 1.9 per cent, while homebuilder Lennar climbed 1.5 per cent. Rebounds for several big, influential stocks of computer chip companies also helped to steady the market. They've been swinging sharply in recent weeks on worries that they shot too high in the euphoria around artificial-intelligence technology. Micron Technology rose 4.4 per cent, and Nvidia added 0.6 per cent. A day before, they were two of the heaviest weights on the S&P 500 after falling 4.4 per cent and 3.5 per cent, respectively. To be sure, big risks remain for inflation. Fighting in the Middle East is threatening to close or slow traffic in the Strait of Hormuz, the narrow waterway that oil tankers use to ship crude from the Persian Gulf to customers worldwide. The price for a barrel of Brent crude, the international standard, rose another 3.5 per cent to USD 86.18. Following its leap of nearly 10 per cent on Monday, it's back to where it was before the United States and Iran signed their interim deal to halt their fighting in the middle of last month. Wall Street's other big focus this week is earnings reporting season, as companies tell investors how much profit they made from April through June. The pressure is on companies to deliver big growth to justify how high their stock prices have jumped. Indexes are near records despite the recent swings caused by worries about AI stocks. Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs and Wells Fargo all on Tuesday reported stronger profits for the latest quarter than analysts expected. Their reports showed strength for their trading desks and suggested spending by US consumers is still resilient. Their stocks were mostly higher following the results. Goldman Sachs rose 4.7 per cent, but Wells Fargo fell 1.7 per cent. On the losing end of Wall Street and dragging the Dow lower was IBM. It fell 24.2 per cent after CEO Arvind Krishna said performance for its software and infrastructure businesses fell short of expectations last quarter. IBM's customers in late June shifted their spending toward servers, storage, and memory to get ahead of expected price increases caused by the AI boom. “These conditions require our teams to execute perfectly, and this quarter we faltered,” Krishna wrote in a letter to investors. “We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall.” In the bond market, the yield on the 10-year Treasury dropped to 4.57 per cent from 4.62 per cent late Monday. It halts a run higher from 3.97 per cent before the war with Iran began. Fed Chair Kevin Warsh will answer questions from lawmakers on Capitol Hill later in the day for the first time since taking over leadership of the central bank. In his prepared testimony, he pledged to make high inflation “a thing of the past” but offered no signal about the Fed's next steps. In stock markets abroad, indexes were mixed in Europe following a stronger finish in Asia. Japan's Nikkei 225 added 0.7 per cent after SoftBank Group Corp. rose 3.3 per cent. It's a big investor in AI, and Chairman Masayoshi Son gave a speech at a company event in Tokyo where he derided the idea that there is a bubble in investments in capacity for AI. Stocks rose 1.4 per cent in Shanghai after the government reported China's exports jumped 27 per cent in June from a year earlier as AI drove strong demand for computer chips and other technology. (AP) ABD