WASHINGTON (dpa-AFX) - Following the weakness seen in the previous session, stocks moved back to the upside during trading on Tuesday. The major averages all finished the day in positive territory, with the tech-heavy Nasdaq posting a standout gain.
The Nasdaq ended the day off its highs of the session but still closed up 233.83 points or 0.9 percent at 26,107.01. The S&P 500 also climbed 28.25 points or 0.4 percent to 7,543.59, while the narrower posted a more modest gain, inching up 9.63 points or less than a tenth of a percent to 52,508.27.
The strength on Wall Street came following the release of a closely watched Labor Department report showing consumer prices in the U.S. decreased by much more than expected in the month of June.
The Labor Department said its consumer price index fell by 0.4 percent in June after climbing by 0.5 percent in May. Economists had expected consumer prices to edge down by 0.1 percent.
The report also said the annual rate of consumer price growth slowed to 3.5 percent in June from 4.2 percent in May, coming in below economist estimates for a 3.8 percent jump.
Meanwhile, the Labor Department said core consumer prices, which exclude food and energy prices, came in unchanged in June after rising by 0.2 percent in May. Economists had expected core prices to increase by another 0.2 percent.
The annual rate of growth by core consumer prices slowed to 2.6 percent in June from 2.9 percent in May, while economists had expected the pace of growth to slip to 2.8 percent.
The weaker-than-expected inflation data helped ease recent concerns about the outlook for inflation and the possibility of higher interest rates.
'Today's better than expected core reading gives the Fed breathing room in deciding whether and when to raise interest rates,' said Nationwide Chief Economist Kathy Bostjancic.
She added, 'That all said, the renewed escalation of conflict in the Middle East and announced reimposition of a U.S. blockage has prompted a sharp reversal in oil and gasoline prices that introduces upside risk to our forecast.'
However, a steep drop by shares of IBM Corp. (IBM) limited the upside for the Dow, with the tech giant plummeting by 25.2 percent.
The nosedive by IBM came after the company reported preliminary second-quarter results that fell short of expectations.
Sector News
Computer hardware stocks saw a substantial rebound after falling sharply on Monday, resulting in a 2.7 percent surge by the NYSE Arca Computer Hardware Index.
A significant rebound was also seen by semiconductor stocks, as reflected by the 2.5 percent jump by the Philadelphia Semiconductor Index.
Steel, gold and networking stocks also turned in strong performances on the day, while pharmaceutical, healthcare and airline stocks showed notable moves to the downside.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index climbed by 0.7 percent, while China's Shanghai Composite Index jumped by 1.4 percent.
The major European markets also turned positive over the course of the session after seeing early weakness. While the U.K.'s FTSE 100 Index rose by 0.3 percent, the German DAX Index crept up by 0.1 percent and the French CAC 40 Index closed just above the unchanged line.
In the bond market, treasuries gave back ground after an initial surge but still managed to end the day higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.4 basis points to 4.585 percent after hitting a low of 4.525 percent.
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