US EQUITY OPEN: Stocks in the green after soft CPI but IBM hits Dow

OPEN: Stocks have opened mixed on Tuesday, with the Nasdaq outperforming as memory names rebound after Monday's sharp sell-off, helping the index recoup some of yesterday's underperformance. The Dow is the only major index in the red, weighed down by IBM (IBM) after its preliminary Q2 results disappointed expectations. The update is also pressuring the broader software sector, with the Software ETF (IGV) opening lower by around 2%, although it has recovered and now in the green. 

Most sectors are either flat or higher, with Materials leading the gains as metal prices rally following the softer-than-expected US CPI report. Health Care is the main laggard, weighed down by weakness in heavyweight names including Eli Lilly (LLY) and Johnson & Johnson (JNJ), perhaps reflecting a modest rotation out of defensive sectors following the benign inflation data.

Financials are also green after a slew of earnings, all largely impressing with GS rallying, while JPM, BAC, C all gain, but WFC slides. 

The macro focus this morning has been the June US CPI report and Fed Chair Warsh's testimony. Inflation came in much softer than expected across the board, with core CPI unchanged on the month. The report prompted markets to sharply pare Fed rate hike expectations, significantly reducing the probability of a July move. Warsh largely reiterated recent messaging, attention turns to the testimony shortly. 

The softer inflation data is supporting equities while Treasuries rally across the curve, led by the front end as markets unwind hawkish Fed pricing. A rate hike is now not fully priced until December, compared with October before the release, while the implied probability of a September hike has also fallen sharply.

In FX, the Dollar is weaker across the board, with the Australian and New Zealand Dollars outperforming as improved risk sentiment supports the higher-beta currencies. The Swiss Franc is also among the leaders as narrower US yield differentials support the currency, while the Japanese Yen is firmer against the Dollar but underperforms its G10 peers.

Crude prices are modestly firmer despite the softer inflation backdrop as geopolitical tensions remain elevated. President Trump warned that further strikes on Iran could take place tonight, keeping a geopolitical risk premium embedded in the oil market. (Analysis on the latest US-Iran developments available here)

STOCK SPECIFICS

• International Business Machines (IBM): Disappointing preliminary Q2 results; broader software names seeing losses
• Goldman Sachs (GS): Top and bottom line surpassed expectations with a strong revenue breakdown
• Wells Fargo (WFC): NII marginally missed, but EPS, revenue and net income beat
• JPMorgan Chase (JPM): FICC revenue light, albeit with a strong report elsewhere
• HCA Healthcare (HCA): Lowered FY26 EPS and adjusted EBITDA guidance
• Tower Semiconductor (TSEM): Gains following headlines on Japanese expansion
• CleanSpark (CLSK): Agreed to a USD 6.6bln 20-year data centre lease
• Nebius Group (NBIS): Said to be selling USD 1bln worth of AI capacity to Reflection
• Apple (AAPL): Downgraded at KeyBanc