New York Stock Exchange [123RF]
New York Stock Exchange [123RF]

US stocks closed higher Tuesday as easing inflation fears drove broad gains across AI-related semiconductor shares.

The Dow Jones Industrial Average edged up 9.63 points, or 0.02 percent, to finish at 52,508.27.

The S&P 500 rose 28.25 points, or 0.38 percent, to 7,543.59, while the tech-heavy Nasdaq Composite climbed 233.83 points, or 0.90 percent, to 26,107.01.

A cooler-than-expected June consumer price index reading eased fears of further Federal Reserve rate hikes and helped restore investor confidence. June CPI rose 3.5 percent year-on-year, slowing from 4.2 percent in May and falling below the 3.8 percent consensus estimate compiled by Dow Jones.

On a monthly basis, prices fell 0.4 percent, also below the consensus forecast of minus 0.2 percent. The monthly decline was the steepest since April 2020, during the pandemic.

The softer-than-expected June inflation data eased market concerns about rising prices.

According to the CME FedWatch tool, the probability of the Fed raising its benchmark interest rate at its July 28-29 monetary policy meeting dropped sharply to 17 percent on Tuesday from 42 percent on Monday.

Fed Chair Kevin Warsh, testifying before the House Financial Services Committee that day, doubled down on the central bank's commitment to price stability, saying, "We will get policy right, and the inflation surge of the past five years will be a thing of the past."

However, the probability of the Fed raising rates at least once more this year remained elevated at around 80 percent.

Major US banks including JPMorgan Chase and Goldman Sachs kicked off the second-quarter earnings season by posting results that beat expectations.

Goldman Sachs surged 9.00 percent on strong trading and investment banking results, while JPMorgan Chase gained 2.5 percent and Bank of America rose 1.88 percent. Citigroup fell 5.29 percent despite a solid earnings beat, weighed down by news of workforce reductions.

Memory chip stocks, which had sold off sharply on Monday, rebounded across the board.

SK Hynix's American depositary receipt surged 27.29 percent on Tuesday — its third trading day since listing — as investors increasingly viewed the shares as undervalued, hitting a post-listing high of $193.92.

Barclays analyst Simon Coles said in a note that the memory chip supply shortage would persist, setting a price target of $330 on SK Hynix's ADR.

Barclays forecast that the memory chip supply shortage will deepen further in 2027, with only limited improvement in 2028, and that tight supply conditions will persist for years.

Nvidia, the bellwether AI chip stock, gained 4.06 percent, while Micron rose 4.92 percent, SanDisk 5.01 percent, Intel 4.50 percent and AMD 2.57 percent.

IBM, a Dow component, plunged 25.21 percent after warning of weakening earnings amid intensifying AI competition, dragging on the blue-chip index's relative underperformance on the day.


jiyun@heraldcorp.com