Wall Street Falls Amid Inflation Concerns, Mixed Bank Earnings

Wall Street experienced a tumultuous session on Tuesday, as markets grappled with a mix of inflation data and mixed bank earnings, leading to a lack of consensus on the direction of the market. The Dow Jones Industrial Average fell 313 points, or 0.5%, by the end of the session. The S&P 500 index slipped slightly from a new all-time high earlier in the day, giving up 0.1%. Meanwhile, the Nasdaq Composite managed to rise 0.5%, driven by a rally in tech stocks, particularly Nvidia, which gained over 4% after announcing plans to restart shipments of its H20 GPUs to China.

June inflation figures, released on Tuesday, presented a mixed picture. Headline inflation rose 0.3% month over month, lifting the annual rate to 2.7%, in line with forecasts. However, the monthly core Consumer Price Index (CPI), which excludes food and energy, rose only 0.2%, slightly under forecasts. The yearly core inflation number came in at 2.9%, also matching estimates. The inflation report raised concerns about the impact of tariffs on consumer prices. Matthew Ryan, head of market strategy at Ebuy, noted that the inflation report "practically confirmed that President Trump’s tariffs acted to push up consumer prices in June." He also warned that the real pain from tariffs hasn't even hit yet, as there is a time lag between when tariffs are implemented and when prices rise. Skyler Weinand, chief investment officer at Regan Capital, agreed, stating that a tariff-driven inflation reckoning is highly likely.

Traders were also digesting a wave of bank earnings, which largely failed to inspire investors. Wells Fargo beat earnings expectations but saw its shares drop more than 4% after lowering its net interest income guidance. JPMorgan Chase posted solid second-quarter results, beating forecasts thanks to strong trading and investment banking performance, but its stock still slid. BlackRock took the biggest hit among financials, with shares dropping more than 6% after missing quarterly revenue expectations. Citigroup was the exception, with its stock rising about 1% after beating second-quarter estimates. Heading into the earnings season, analysts expected the S&P 500 to post a 4.3% growth rate in earnings for Q2, the lowest growth rate since Q4 of 2023. With the mixed earnings reports, there is not much reason to expect an upside surprise.

Wall Street now finds itself in a state of uncertainty, with no clear consensus on what matters more: inflation that may be accelerating again or a weak earnings season that could drag stocks down. Indexes are already sitting near record highs, leaving little room for mistakes. The only thing that analysts agree on is that there is too much happening at the same time, and none of it looks simple. The market is being pulled in different directions, with no clear signal on what comes next.