Morning in New York: New inflation data will set the tone for trading

A daily review and forecast of events in the U.S. stock market by Mikhail Denislamov, Deputy Director of Capital Markets Research at Freedom Broker.

The ongoing tensions in the Middle East remain one of the key factors shaping the dynamics of global markets. After the U.S. military reinstated the naval blockade of Iranian ports, the Islamic Revolutionary Guard Corps threatened to block other export routes used by the U.S. and its allies. Donald Trump abandoned the idea of imposing a 20% tariff on cargo transported through the Strait of Hormuz, announcing instead the conclusion of bilateral trade and investment agreements. At the same time, the White House chief stated that the U.S. plans to launch strikes next week against Iran’s energy infrastructure and bridges if Tehran does not return to negotiations. Against this backdrop, WTI crude is trading around $80 per barrel. We believe the conflict is unlikely to be resolved quickly, but for now, events are unfolding along the lines of a limited escalation. U.S. stocks are currently reacting primarily to the Fed’s actions and the earnings season.

The focus of today’s trading is on the release of the June Producer Price Index (PPI). The consensus forecast calls for zero growth in the overall index, with the core index rising 0.3% month-over-month. The Freedom Broker model projects a 0.2% month-over-month increase in the index, which could be driven by an expected decline in the cost of transportation services. Yesterday’s CPI data came in positive, and the PPI figures will be evaluated in light of that.

The Fed’s “Beige Book” will be released this evening; it is of interest in terms of assessing economic activity across U.S. regions. We expect the report to once again highlight persistent inflation risks, though this will likely not be enough to prompt a rate hike following the July 28–29 meeting.

BlackRock (BLK) reported its quarterly results. Before the start of the main trading session, Morgan Stanley (MS), Johnson & Johnson (JNJ), Conagra Brands (CAG), Elevance Health (ELV), and Cintas (CTAS) will also release their earnings reports. After the market closes, United Airlines (UAL), Home BancShares (HOMB), J.B. Hunt Transport Services (JBHT), Karooooo (KARO), and Frequency Electronics (FEIM) will release their financial results.

Futures on U.S. stock indices are showing a moderately positive trend. We assess the risk outlook for the upcoming session as neutral, with high volatility.

— ASML Holding (ASML) shares are up more than 5% as its quarterly results exceeded average market expectations. In addition, management has once again raised its revenue forecast for the current year—this time from 36–40 billion euros to 43–45 billion. This was driven by exceptionally high demand for semiconductor manufacturing equipment from AI chipmakers.

— Aehr Test Systems (AEHR) shares soared nearly 30% in response to the release of its quarterly earnings report, guidance for fiscal year 2027, and the announcement of new orders totaling over $8 million for silicon carbide wafer testing equipment.

— Lionsgate Studios (LION) shares are up more than 4% on news of takeover interest from the Bolloré Group and the Banijay Group. The company’s board of directors, together with its financial advisors, is currently evaluating the proposals received; no decision on the deal has been made.

— Schmid Group (SHMD) is up nearly 15% following the release of its second-quarter business update and an upward revision of its order volume forecast for fiscal year 2026 from approximately 114 million euros to 125–150 million.

— Pentair’s (PNR) preliminary second-quarter results and a downward revision to its 2026 outlook caused its stock to plummet by about 15%. The company attributed the revision of its outlook to the ongoing reduction in distributor inventories in the pool equipment segment and also announced upcoming changes to its management team.

— Wabash National (WNC) is down nearly 14% following the announcement of a $100 million offering of convertible senior unsecured bonds maturing in 2032.

Trading on July 14 on U.S. stock markets ended in positive territory. The S&P 500 gained 0.38%, the NASDAQ 100 rose 1.1%, the Dow Jones rose 0.02%, and the Russell 2000 rose 0.39%.

The technology sector (XLK: +1.29%) led the gains, thanks to a rebound in chipmaker stocks and NVIDIA (NVDA: +4.06%). The healthcare sector (XLV: -1.93%) was the underperformer after HCA Healthcare lowered its revenue forecast.

The key macroeconomic event of the day, which bolstered the market’s bullish sentiment, was the release of the June Consumer Price Index (CPI). The headline CPI fell by 0.4% month-over-month, compared with a consensus estimate of -0.1%, following a 0.5% increase the previous month; the core index remained unchanged, while expectations had been for a 0.2% month-over-month increase. The slowdown in inflation was seen as a sign that disinflationary trends were resuming. This reinforced expectations of monetary policy easing by the Fed and boosted demand for risky assets.

Another positive factor was the aforementioned softening of U.S. President Donald Trump’s rhetoric regarding trade policy. Despite ongoing uncertainty regarding the U.S.-Iran conflict, investors expect that any escalation will not be prolonged or severe. Against this backdrop, WTI crude oil rose 1.5%, although it gave up some of its intraday gains by the close.

Most second-quarter earnings reports exceeded market consensus estimates, but the stock market's reaction to the earnings releases was mixed due to inflated expectations.

— J.P. Morgan Chase (JPM: +2.5%) reported second-quarter results that beat consensus estimates. Strong performance was recorded in the divisions specializing in equity trading and equity and debt capital markets (ECM and DCM). The bank’s management raised its forecast for net interest income, excluding trading activities, for 2026.

— Goldman Sachs (GS: +9%) significantly exceeded market expectations for second-quarter earnings and revenue. The main drivers of the improved results were strong revenues from the investment banking business, as well as from the equity and fixed-income trading divisions.

— Citigroup’s (C: -5.3%) quarterly report came in stronger than market consensus estimates. However, the bank’s stock price came under pressure as it maintained its return on equity guidance for the current year. Investors were also concerned by management’s plans to increase investments in the second half of the year.

— IBM’s preliminary results (IBM: -25.2%) fell significantly short of market expectations. The company announced the postponement of several major contracts and noted a trend toward clients shifting their spending from software to servers, data storage systems, and memory amid the rapid development of AI infrastructure.

— Tower Semiconductor (TSEM: +11.2%) announced a major expansion of its silicon photonics manufacturing capacity. The company expects to launch new production lines by the end of 2027 and increase annual revenue to $3.6 billion by 2028, driven by growing demand for components.

This article was AI-translated and verified by a human editor