[New York Stock Exchange] Dow and S&P Fall on June CPI Rebound and Disappointing Bank Earnings... Only Nasdaq Rises on Nvidia Surge

CPI Growth Rate Rises from 2.4% in May to 2.7% in June
Tariff Impact Becomes Visible... September Rate Cut Expectations Fall
Second Quarter Earnings: JPMorgan and Wells Fargo Drop
Nvidia Surges 4% as 'H20' Exports to China Resume

The three major indices on the New York Stock Exchange ended mixed on the 15th (local time). The Dow Jones Industrial Average (Dow) and the S&P 500 declined due to a rebound in the June Consumer Price Index (CPI) and disappointment over the earnings of major financial firms. The Nasdaq rose, supported by a 4% surge in Nvidia, which resumed public sales of its artificial intelligence (AI) chip, the H20.

Reuters Yonhap News

On this day, the blue-chip-focused Dow fell by 436.36 points (0.98%) to close at 44,023.29. The large-cap S&P 500 dropped 24.8 points (0.4%) to 6,243.76, while the tech-heavy Nasdaq rose 37.47 points (0.18%) to finish at 20,677.8.

By stock, Nvidia jumped 4.04%. Buying surged after the Trump administration allowed Nvidia to resume public sales of the H20 in China. Jensen Huang, Nvidia's CEO, said in an interview with China Central (CC) TV, "The US government has approved exports, so we can now ship. We will now sell the H20 in the Chinese market." Financial stocks were mixed. Citigroup, which posted second-quarter results surpassing Wall Street expectations, rose 3.68%, while JPMorgan fell 0.74%. Wells Fargo plunged 5.43% despite reporting better-than-expected results, after lowering its net interest income forecast. BlackRock also dropped 5.88% following results that fell short of market expectations.

The inflation data released by the US Department of Labor in the morning confirmed the impact of President Trump's tariffs. According to the Department of Labor, last month's CPI rose 2.7% year-on-year. This exceeded the market expectation of 2.6% and marked a wider increase than in May (2.4%). Analysts noted that as summer began, the effects of tariffs started to be gradually reflected in prices. By category, housing and energy prices saw notable increases. Housing costs rose 0.2% from the previous month, and energy prices climbed 0.9%. In contrast, new and used car and truck prices fell by 0.3% and 0.7%, respectively, as preemptive purchases surged before the auto tariffs took effect in April. The core CPI, which excludes volatile energy and food prices, rose 2.9% year-on-year. This was a slight increase from May (2.8%) but below the expert forecast of 3.0%.

After the CPI release, Thomas Barkin, President of the Richmond Federal Reserve Bank, diagnosed that price pressures are increasing. In an interview with Bloomberg News, he said, "Suppliers who have experienced inflation are trying to pass on cost pressures, and consumers, already weary of inflation, are cutting back on spending."

The market lowered its expectations for a rate cut in September. According to CME FedWatch, the probability that the Fed will cut rates by 0.25 percentage points from the current annual rate of 4.25-4.5% in September was 54.4%, down from 58.9% the previous day. The probability of a rate hold in July rose to 97.4% from 93.8% the previous day.

With the effects of tariffs starting to be gradually reflected in prices, Wall Street believes that future consumer indicators and the effective tariff rate will determine the level of inflation and the path of interest rates.

Matthew Ryan, Head of Market Strategy at global financial services firm Ebury, said, "The latest US inflation report confirms that President Trump's tariff policy contributed to the rise in June consumer prices," adding, "If there is an additional tariff hike on August 1, future inflationary pressure will almost certainly intensify."

David Russell, Global Head of Market Strategy at TradeStation, commented on the CPI report, saying, "It eased fears of a worst-case scenario of a tariff-driven inflation spike, but core CPI still far exceeds the target (2%). Overall, it's good news, but it's not definitive. Tariffs could still be imposed, and the wait-and-see stance continues."

US Treasury yields are on the rise. The yield on the 2-year Treasury, which is sensitive to monetary policy, rose by 5 basis points (1bp=0.01 percentage point) from the previous day to 3.95%. The 10-year Treasury, the global benchmark for bond yields, rose by 6 basis points to 4.49%.