S&P 500, Nasdaq End Higher On Support From Chipmakers, Cybersecurity Stocks And Soft Inflation Data — NVDA, GS, SKHY, VZ, LCID In Focus

• The S&P 500 ended 0.4% higher, while the Nasdaq 100 rose 1.1% and the Dow Jones Industrial Average ended flat.
• Consumer prices dropped in June for the first time in six years.
• A slew of top Wall Street banks beat analyst expectations in Q2. 

The S&P 500 and Nasdaq ended higher on Monday as soft consumer inflation data eased concerns about an interest rate hike, while gains in chipmaker and cybersecurity shares helped lift the indexes.  

The S&P 500 ended 0.4% higher, while the Nasdaq 100 rose 1.1% and the Dow Jones Industrial Average ended flat. The Russell 2000, which tracks stocks with small market capitalizations, rose 0.4%.

Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY) gained 0.4% and Invesco QQQ Trust (QQQ) ended Tuesday around 1.2% higher, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) rose 0.1%. 

Meanwhile, the VanEck Semiconductor ETF (SMH) jumped 2.6%, its highest single-day gain so far this month, aided by strength in Nvidia (NVDA), Advanced Micro Devices (AMD), Micron Tech (MU) and Broadcom (AVGO) shares, while the broader Vanguard Information Technology ETF (VGT) gained about 1.6%.

Retail sentiment on Stocktwits for SPY, QQQ and DIA was in ‘bullish’ zones with ‘normal’ to ‘high’ message volumes.

US Market Drivers

The annual consumer price inflation rate moderated to 3.5% in June. This decline, the first in six years, was sharper than the 0.2% monthly decrease and the 3.8% annual rate anticipated by economists in a Dow Jones poll, accessed by CNBC.

According to the CME's FedWatch Tool, the likelihood of a rate increase at the July meeting fell sharply to 17%, down from 42% just a day earlier. Nevertheless, market participants continue to anticipate a hike in September, pricing in a nearly 60% probability of a quarter- to half-point rate increase.

“Softer than expected CPI is a big relief,” Tiffany Wilding at Pacific Investment Management told Bloomberg in an interview. “While today’s report will not eliminate discussion of further tightening entirely, it should effectively remove a July rate hike from consideration.” 

Meanwhile, crude prices and treasury yields eased after President Donald Trump backed away from imposing a fee on all shipments traveling through the Strait of Hormuz. 

Among corporate news, a sudden profit warning from International Business Machines Corp. (IBM) and subsequent commentary from CEO Arvind Krishna highlighting rising cybersecurity priorities among customers triggered a massive rally in major cybersecurity firms, with CrowdStrike topping the S&P 500 in Tuesday’s session. 

Trending Stocks To Watch 

Nvidia (NVDA): A Reuters report said three Chinese firms had received U.S. approval to buy Nvidia’s advanced H200 processors. 

Goldman Sachs (GS): The bank reported record second-quarter earnings, lifting the stock to a new all-time high. 

SK Hynix (SKHY): Barclays initiated coverage on the South Korean memory maker with an ‘Overweight’ rating. 

Verizon Communications (VZ): The telecom provider is preparing to implement a new wave of employee layoffs this week, according to media reports.

Lucid (LCID): The EV maker rejected reports that it is weighing a take-private transaction or filing for bankruptcy protection. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.