US Stock Market Rebounds as Inflation Cools, Easing Rate Hike Concerns

US stock markets advanced following data showing a decline in the Consumer Price Index for June, its first drop in six years, which alleviated investor concerns about further interest rate hikes from the Federal Reserve.

The S&P 500 index closed 0.4% higher, reversing losses from Monday's session.

The Nasdaq 100 index gained 1.1%, buoyed by a rebound in leading South Korean memory chip stocks, with gains for SK Hynix and Samsung Electronics lifting their US-listed peers.

Data from the US Bureau of Labor Statistics indicated the Consumer Price Index fell 0.4% month-on-month in June, influenced by the largest drop in gasoline prices since 2022.

Investors are now awaiting the release of the Producer Price Index (PPI) data scheduled for Wednesday.

Subadra Rajappa, Head of US Research at Societe Generale, noted that the upcoming PPI figures would be a key focus as they will influence the core PCE data due later this month.

Traders are also monitoring commentary from Federal Reserve Chair Kevin Warsh during his congressional testimony. Warsh stated that Fed policymakers have zero tolerance for high inflation, reiterating the commitment to curb the persistent high inflation that has lasted five years.

On the geopolitical front, the US President has abandoned a plan to impose a 20% compensation fee on cargo shipments transiting the Strait of Hormuz.

The temporary peace agreement between the US and Iran has effectively broken down, with the US military reimposing a maritime blockade on Iran and launching a new round of strikes.

JPMorgan Chase & Co. shares rose 2.5% after the bank reported a record quarterly profit, with equity trading revenue significantly exceeding analyst expectations.

International Business Machines Corp. shares plunged 25% after the company released preliminary quarterly sales figures that fell short of analyst forecasts.

At the market close, the S&P 500 index was up 0.4% at 7,543.59 points.

The Dow Jones Industrial Average was essentially flat at 52,508.27 points.

The Nasdaq Composite index increased 0.9% to 26,107.01 points.

The Nasdaq 100 index advanced 1.1% to 29,586.29 points.

The Russell 2000 index gained 0.4% to 2,964.764 points.