S&P 500 and Nasdaq rise after cooler inflation, strong bank earnings
Cooler June inflation and solid bank earnings lifted the S&P 500 and Nasdaq, as traders bet the Federal Reserve could stay less hawkish. The Dow slipped as defensive stocks lagged.
The S&P 500 and Nasdaq rose after a softer June inflation reading and a strong batch of big-bank earnings revived appetite for risk across Wall Street. The Dow Jones Industrial Average edged lower, held back by weakness in defensive stocks, while chip shares helped pull the Nasdaq ahead.
The U.S. Bureau of Labor Statistics said the Consumer Price Index fell 0.4% in June 2026 and increased 3.5% from a year earlier. The monthly decline was the largest since April 2020, and it came in below Wall Street expectations for a 0.2% drop and a 3.8% annual increase. That combination gave traders fresh confidence that the Federal Reserve could take a less hawkish stance on interest rates if price pressures keep easing.
Bank earnings added to the move. JPMorgan Chase, Bank of America, Goldman Sachs, Wells Fargo and Citigroup were among the major lenders reporting second-quarter results, and trading revenue plus investment banking fees helped support the numbers. The solid results steadied sentiment in a market still watching for signs that credit, dealmaking and capital markets can hold up even as borrowing costs remain elevated.
The gains were not a pure vote of confidence in the economic outlook. Rising Middle East tensions stayed in the background, with oil prices elevated on conflict worries even as bond yields eased after the inflation report. That split screen left investors balancing a friendlier path for rates against the risk that geopolitical shocks could keep energy prices volatile and complicate the inflation outlook again.
The session also showed a narrow but telling leadership pattern. Chip shares rebounded and pushed the Nasdaq to the front, while defensive shares weakened and left the Dow behind. The contrast suggested investors were willing to lean back into growth and cyclicals after the inflation data, but only with one eye on the next move in prices and the other on how durable bank profits and the broader economy prove to be through the second half of the year.
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