| No images? Click here   By Megan Leonhardt | Tuesday, July 15 Whiplash. The tech-powered Nasdaq Composite notched a record day on the strength of the latest Nvidia surge, but the resilience was in short supply elsewhere. The Nasdaq closed up 0.2%—which took the index to 20,677.80, its eighth record close this year. The performance was driven by Nvidia, which closed up 4% on news that the company had persuaded the Trump administration to relax export restrictions on chips designed for China. The Dow Jones Industrial Average ended down 436 points, or nearly 1%, while the S&P 500 had some wild swings—hitting a fresh intraday record high in the morning—before finishing down 0.4%. The more optimistic start to the day was helped by healthy second quarter earnings by big banks. JPMorgan Chase reported better-than-expected quarterly earnings, as did Citigroup. Wells Fargo also beat estimates, but its stock fell after the bank lowered its forecast for 2025 net interest income. Beyond the banks' balance sheets, the results showed that the economy remained resilient through the first half of the year and household finances were relatively solid. As my colleague Rebecca Ungarino reports:
“If you look at indicators of stress, not surprisingly, you see a little bit more stress in the lower-income bands than you're seeing the higher income bands,” JPMorgan Chief Financial Officer Jeremy Barnum told analysts this morning. “But that's always true. That's pretty much definitionally true, and nothing there is out of line with our expectations.” More information comes tomorrow as Bank of America, Goldman Sachs, and Morgan Stanley report quarterly results before the market opens.  DJIA: -0.98% to 44,022.89 The Hot Stock: Super Micro Computer +6.9% Best Sector: Technology +0.9%    Inflation is on the Rise. Where We Go From Here.Markets shrugged off the results of the latest Consumer Price Index, released this morning, because the readings were largely in line with expectations. But with inflation accelerating in America, even with only limited effects from tariffs hitting so far, the only real place to go is up. That makes the markets' complacency a bit worrisome. The total measure of inflation in June was in line with expectations, but it was still a significant jump in the wrong direction. The consumer price index climbed 2.7% year over year in June, up from 2.4% in May. Monthly headline inflation was 0.3% in June, the fastest rate in five months and up from 0.1% in May. Core inflation was a bit softer than anticipated, climbing 2.9% year-over-year compared with the 3% annual growth projected by economists. That provides some comfort, yet it was still the strongest year-over-year result for the core CPI metric since February. The monthly gain was 0.2% in June, compared with 0.1% in May. Even with the slower rise in core inflation, Tuesday’s report “all but dashes any remaining hopes” that the Federal Reserve will cut interest rates at its meeting later this month, wrote Bret Kenwell, U.S. investment analyst at eToro. The reversal of progress in cooling core inflation, even before the effects of higher tariffs have gained momentum, complicates the picture for Fed officials. If subsequent headline and core inflation readings continue to rise, it could “jeopardize” future rate cuts as well, Kenwell said. The strong headline print for June was largely driven by higher food and energy prices, though some goods that are more vulnerable to higher tariffs—including clothing and furniture—registered notable price increases over the month. Services inflation excluding housing was 0.4% in June, the strongest increase in this category since January. “Inflation pressure will likely remain acute for the rest of the summer. Tariffs have not materially impacted inflation metrics yet, so we should expect some further pressure in the coming months,” wrote Jeff Roach, chief economist for LPL Financial. With increases in categories like household furnishings, recreation, and apparel, President Donald Trump’s aggressive tariffs are slowly filtering through to core goods prices, wrote Seema Shah, chief global strategist at Principal Asset Management. “Tariffs typically take several months to feed through to inflation data, while the significant front loading of imports implies that few goods may have been subject to tariffs yet,” Shah said. She argued that while tariff-induced boosts to inflation could be short-lived, higher tariffs are still being announced and it would be “wise” for Fed policymakers to remain on the sidelines for a few more months at least. After their mistaken call that postpandemic inflation would be “transitory,” Fed officials will likely want to be fully confident that tariffs are a one-off price change before moving on rates, wrote James Knightley, chief international economist at ING. He doubts policymakers will have enough evidence to be certain of that by the September policy meeting, so Knightley believes there would need to be signs of “significant weakness” in employment to trigger a change in rates. “That suggests the president’s frustrations with Jerome Powell will intensify, with him set to seek a more dovish replacement for when Powell's term as Fed Chair ends early next year,” Knightley wrote.  The CalendarASML Holding, Bank of America, Goldman Sachs Group, Johnson & Johnson, Kinder Morgan, Morgan Stanley, M&T Bank, PNC Financial Services Group, Progressive, Prologis, and United Airlines Holdings announce earnings. The BLS releases the producer price index for June. Consensus estimates are for a 2.5% rise year over year for the PPI and a 2.7% increase for the core PPI. This compares with 2.6% and 3%, respectively, in May. The Federal Reserve releases the beige book for the fifth of eight times this year. The report gathers anecdotal information on current economic conditions from its 12 regional banks. --Dan Lam  What We're Reading Today
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