U.S. stocks closed trading mostly higher after June inflation in the United States fell more sharply than analysts expected. The market was also supported by favorable results from major banks and renewed interest in chip company stocks.
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Decline in inflation boosted stock indices
The Dow Jones index, which includes stocks of 30 leading American companies, gained 0.02 percent and closed at 52,508.27 points. The broader S&P 500 index rose 0.38 percent to 7,543.59 points, and the tech-heavy Nasdaq Composite increased 0.90 percent to 26,107.01 points.
The U.S. Department of Labor announced that consumer prices in the USA increased 3.5 percent year-over-year in June. Inflation thus declined from May’s three-year high of 4.2 percent, primarily due to cheaper gasoline. The data eased expectations that the U.S. central bank might proceed with raising interest rates. However, analysts caution that the decline in inflation may only be temporary, as the conflict between the United States and Iran continues to create pressure on energy prices.
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Market supported by banks and chip makers, IBM sharply weakened
The stock market growth was supported by favorable quarterly results from major banks and a revival of interest in chip company stocks. A notable exception was technology company IBM, whose shares plunged more than 25 percent. The company’s preliminary results for the second quarter fell short of expectations, and CEO Arvind Krishna admitted that the company failed to respond quickly enough to changes in the industry.
The U.S. dollar weakened against the euro and other major currencies following the release of inflation data. Shortly after 10:00 p.m. CEST, the euro gained approximately 0.3 percent against the dollar and was trading near 1.1420 USD. New Fed chair Kevin Warsh simultaneously promised to keep inflation under control. The central bank left the base rate in the range of 3.50 to 3.75 percent in the middle of last month and will decide on further monetary policy settings at the end of this month.
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Source: ČTK
