U.S. stocks rise as inflation cools and oil, IBM swings reshape trading

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US stocks rise on inflation, oil

Highlights

Headline CPI drops to 3.2%, missing expectations and marking the largest one-month decline since April 2020, boosting major indexes modestly.
WTI crude jumps over $80 after a 9.4% surge due to worsening supply disruptions near the Strait of Hormuz, lifting shares of major energy firms like ExxonMobil.
IBM plunges about 24% after warning it will miss earnings and revenue targets, its worst single-day drop in nearly 40 years, amplifying tech sector uncertainty.

Inflation data and market volatility

As reported by Cboe Global Markets, markets are navigating a volatile session shaped by softer inflation data, rising crude prices and the start of earnings season. The Bureau of Labor Statistics says headline CPI falls to 3.2%, below expectations and down from 4.2% in the previous month, marking the biggest one-month decline since April 2020.

Major indexes are modestly higher in early trading after the inflation report, though gains are limited. The S&P 500 rises 0.14%, the Dow Jones Industrial Average slips 0.11% and the Nasdaq Composite adds 0.55%, following losses for all three indexes in the previous session.

Oil is a central driver of sentiment as WTI crude surges back above $80 a barrel after a 9.4% jump the day before, its largest one-day gain in three months. The move follows reports of worsening supply disruptions tied to the U.S.-Iran standoff over the Strait of Hormuz, where traffic is near a standstill, and energy stocks including ExxonMobil, Valero, Chevron and ConocoPhillips are trending higher.

IBM slump and earnings season outlook

One of the biggest drags on the Dow is IBM, whose shares tumble about 24% after the company warns it will miss earnings and revenue expectations. IBM says customers are shifting spending toward servers, storage and memory as supply tightens amid AI expansion, and Chief Executive Arvind Krishna says execution missteps and delayed large deals drove most of the shortfall.

The drop puts IBM on track for its steepest one-day fall in nearly 40 years, ahead of final results due next week. The warning also adds to broader questions in technology markets about whether heavy AI spending will deliver financial returns, even as chip shares rebound in early trading after sharp losses a day earlier.

Bank stocks are mixed despite strong quarterly results from Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup and Wells Fargo, with investment banking fees helping lift performance. JPMorgan Chief Executive Jamie Dimon says geopolitical tensions, sticky inflation, large global fiscal deficits and elevated asset prices remain risks that could still disrupt markets.

In our earlier article on the June U.S. CPI slowdown and the Fed rate outlook, we noted that softer inflation readings prompted traders to sharply scale back the probability of a near-term rate hike. We also highlighted how renewed volatility in oil prices tied to tensions around the Strait of Hormuz could keep inflation expectations elevated and complicate the policy path.

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