Wall Street Morning Brief: CPI cools, semiconductors rebound, bank earnings kick off strong, but IBM plunges 25%

Every Monday through Friday morning, PANews delivers insights on macro trends, US equities, AI, precious metals, and crude oil—using data to recap markets and trends to seize opportunities ahead.

All three major U.S. equity indices closed higher,with the Dow Jones Industrial Average edging up 0.02%; the S&P 500 rising 0.38%; and the Nasdaq Composite gaining 0.90%. The market rally was not broad-based but rather a classic case of 'easing rate pressure + concentrated AI hardware surge.'

June’s U.S. CPI data acted as the catalyst for overnight trading, showing thatCPI rose 3.5% year-over-year, below market expectations,marking a notable decline from May’s 4.2%; on a month-over-month basis, it fell 0.4%,its first monthly decline in six years., a sharp drop in gasoline prices was the main drag. Core CPI remained flat at a 0.2% month-over-month increase, indicating that services inflation hasn’t fully capitulated—but it was enough for traders to slash bets on a July rate hike.

According to CME FedWatch, following the CPI release,market pricing shows the probability of the Federal Reserve holding rates steady in July jumped from 58.3% the previous day to 83.4%, while the likelihood of a July rate hike fell from around 42% to approximately 17%.Chuck Carlson, CEO of Horizon Investment Services, said the inflation report “undermined the case for further Fed rate hikes,” giving the central bank “cover to stand pat for now.”

However, Fed Chair Kevin Warsh did not give markets a dovish gift in his congressional testimony debut, emphasizing that the June CPI cooldown does not mean “mission accomplished.” He stressed the Fed’s “zero tolerance” for high inflation, reiterated that policy will remain data-dependent, and underscored the “sacrosanct” independence of the Federal Reserve. Christopher Hodge, chief U.S. economist at Natixis, noted the CPI reading at least spared Warsh from being forced into an immediate rate hike; Brian Therien of Edward Jones added that Warsh was bolstering his anti-inflation credibility without committing to a specific policy path.

The VIX volatility index—commonly known as the “fear gauge,” which measures expected market volatility over the next 30 days—continued to decline, closing at 16.50 on July 14, down 3.85%, returning to the low-risk zone around 16. A level near 16 signals a notable retreat in short-term market panic, but it doesn’t mean risks have vanished—it’s more like traders temporarily unwound their hedges rather than truly eliminating exposure to war, oil, and interest rate risks.

AlthoughTrump abruptly withdrew his proposal to impose a 20% transit fee on vessels passing through the Strait of Hormuz,stating instead that trade and investment agreements with Gulf states would replace the fee mechanism, briefly easing global concerns over energy transportation—but Middle East tensions have not genuinely cooled.

This alleviated extreme expectations about shipping costs and energy-driven inflation. However, on the same day, the U.S. reinstated its naval blockade of Iranian ports and coastal areas and launched a new round of airstrikes, while Iran was also reported to have retaliated against U.S. military bases and tanker targets in the Gulf—keeping the Hormuz risk premium intact.

Oil prices surged then pulled back but still closed higher, with WTI crude and Brent crude oscillating around USD 80 and USD 85 per barrel, respectively.Goldman Sachs’ strategic view cautions that the real inflation signal may not lie in crude oil itself, but rather in the tightness of distillates and refined products; as long as shipping volumes are constrained—without necessarily requiring a full blockade of the Strait—it would be sufficient to push energy prices higher again.

ClearView Energy Partners estimates that if the proposed 20% toll on Hormuz were actually implemented, under an assumption of USD 78 per barrel oil prices, it could raise U.S. gasoline costs by approximately 37 cents per gallon. This is also the practical reason Trump quickly backed away from the toll proposal: energy-driven inflation and cost-of-living pressures ahead of the midterm elections represent political minefields the White House is unwilling to trigger.

As inflation cools,U.S. Treasury yields ended their previous streak of consecutive gains, with the 10-year yield retreating to 4.58%,further alleviating valuation pressure on growth stocks.

The dollar index remained broadly range-bound at elevated levels. The market is now more focused on the upcoming Producer Price Index (PPI) data and employment figures over the coming weeks to confirm whether the current cooling in inflation is sustainable.

Gold exhibited choppy trading: on one hand, declining Treasury yields reduced the opportunity cost of holding gold; on the other, escalating tensions in the Middle East continued to fuel safe-haven demand. These opposing forces offset each other, keeping gold largely range-bound.

According to data from the U.S. Treasury Department,In May, foreign investors increased their holdings of U.S. Treasury securities by $18.5 billion to $9.37 trillion, the second-highest level on record.Canada added $38.7 billion, the UK added $11.1 billion, and mainland China added $8.2 billion; Japan, however, reduced its holdings by $66.8 billion—a move widely linked by markets to foreign exchange interventions and portfolio rebalancing. These figures indicate that despite elevated interest rates and geopolitical tensions, U.S. Treasuries remain the anchor for global reserve assets, though behavior among major holders is increasingly diverging.

Following a sharp correction in the previous session, AI-related stocks staged a strong rebound, with growth stocks once again emerging as the primary focus of market inflows.

The defining theme of last night’s U.S. market action was not broad-based gains, but rather structural rotation driven by renewed risk appetite. Cooling CPI data eased discount rate pressures, while strong earnings from major banks confirmed that U.S. corporate profitability remains intact—prompting capital to flow back from defensive positions into AI hardware, memory, semiconductors, and optical communications.

The semiconductor sector was the strongest performer last night, with the Philadelphia Semiconductor Index surging 2.54% and semiconductor ETFs rising approximately 2.51%. The market interpreted softer inflation data as a sign of easing valuation pressure on tech stocks, while continuing to bet on expanding capital expenditures for AI servers, HBM, high-end DRAM, and data centers.

The memory supply chain became the focal point of market momentum, as demand for high-bandwidth memory and premium storage from AI servers continues to rise, while supply constraints limit near-term output expansion. Strong long-term orders and upward price revisions are jointly reinforcing profit expectations. JPMorgan believes the tight supply-demand balance in memory will persist, with no significant new capacity expected to come online before early 2028.

Optical communications stocks also rallied sharply, reflecting investor rotation from GPUs and HBM toward intra-data-center connectivity, silicon photonics, optical modules, and advanced packaging.

Bank stocks played a stabilizing role in market sentiment, as large banks reported Q2 earnings broadly ahead of expectations, with trading, investment banking, and wealth management standing out as bright spots—demonstrating Wall Street’s continued strong profitability amid high market volatility and the AI financing cycle. Tom Hainlin, Bank of America’s asset management strategist, noted that the market is most focused on what banks are seeing regarding consumer health, and initial signals appear positive.

However, cracks are emerging: software and traditional IT services came under pressure as enterprise budgets shift toward AI servers, memory, storage, and data center infrastructure, leading some legacy software orders to be delayed or displaced. Goldman Sachs warned that this reallocation of AI-related capital expenditure could validate a 'software bear market' scenario, indicating that the AI boom is not distributing funds evenly but rather reshuffling the profit pools across the tech sector.

SK Hynix ADR surged 27.29%, making it the biggest winner last night, marking its largest single-day gain since listing and driving the premium over its South Korean-listed shares to briefly exceed 50%. The catalyst was primarily the official launch of SK Hynix ADR options on U.S. options exchanges, combined with continued strong bullish sentiment from top research firm SemiAnalysis on demand for HBM (High Bandwidth Memory). Significant capital flowed into short-dated options, with call options dominating trading volume, indicating the market is once again betting on sustained explosive demand for AI servers.

Micron Technology rose 4.92%: Its trading volume ranked among the highest on U.S. exchanges, benefiting from upward revisions in demand expectations for HBM, DRAM, and AI server memory. Institutions project its profits will surge explosively in fiscal years 2026–2027, with JPMorgan noting that supply tightness in the memory sector is likely to persist at least into early 2028.

SanDisk gained 5.01%:Driven by the upcycle in memory markets and expectations of large cloud computing contracts. Goldman Sachs, Wedbush, and Evercore ISI continue to express confidence in its earnings sustainability, with some analysts arguing the market has underestimated the visibility of its revenue and profit growth over the next few years. AMD rose 2.57%, ASML climbed over 2%, and Applied Materials and Teradyne each gained more than 3%.

NVIDIA rose 4.06%:NVIDIA is considering a partnership with Mitsubishi Heavy Industries to integrate advanced cooling systems and energy management capabilities into its next-generation AI data centers, referred to as 'AI factories.' The market interpreted this move as NVIDIA’s continued expansion of its data center ecosystem.

Intel rose 4.50%:The company announced a €5 billion investment in Ireland to upgrade European manufacturing capacity and install advanced production equipment to deliver Xeon 6 and next-generation Xeon processors. This investment accounts for approximately 30% of Intel’s planned $17 billion in capital expenditures for 2026 and is seen as a strategic move to strengthen its European supply chain in anticipation of rising demand for AI and high-performance computing.

IBM plunged 25.21%: marking its largest single-day drop in its 115-year history, as the company's preliminary Q2 results fell short of market expectations, with the CEO acknowledging the company failed to adapt promptly to shifting client budgets toward servers, storage, and memory, causing several large deals to miss their expected closing timelines. Goldman Sachs believes this could validate 'software bear market' pressures, as AI infrastructure capital expenditures are squeezing traditional software service budgets.

SpaceX fell 2.20%: marking its third consecutive day of declines, closing at $136.08—just shy of its $135 IPO price. The stock has now shed roughly one-third of its value from post-listing highs, erasing nearly $850 billion in market capitalization. The CEO of Mahoney Asset Management believes SpaceX has not yet hit bottom, and supply-side pressure from insider share unlocks in the coming months warrants close monitoring.

Oracle dropped 2.74%:Markets are concerned about its high debt levels and execution risks tied to its $300 billion data center project linked to OpenAI. Investors are beginning to reassess who bears the capital expenditure and who captures the profits in AI infrastructure expansion.

Apple declined 0.77%:The company is reportedly evaluating PrismML’s large model compression technology, aiming to run a 27-billion-parameter model locally on iPhones, paving the way for Siri upgrades and on-device AI capabilities. While the news is moderately positive over the medium to long term, it failed to offset near-term pressures from divergence among mega-cap tech stocks.

Microsoft fell 1.55%:Amid strong performance in the AI hardware chain, platform-oriented software giants are under pressure, with some capital rotating from AI application layers into hardware segments such as storage, semiconductors, and optical communications.

The optical communications sector surged:AXT Inc. rose more than 12%, Applied Optoelectronics gained nearly 7%, Lumentum climbed over 5%, POET Technology advanced over 4%, Ciena rose more than 3%, and Corning and Broadcom both gained over 2%. Tower Semiconductor announced plans to advance its 300mm silicon photonics, silicon-germanium processes, and advanced packaging capacity in Japan, reinforcing market expectations for AI data center optical interconnect demand.

Goldman Sachs rose 9.00%: marking its best single-day performance of the year, with second-quarter profits exceeding expectations,equity trading revenue hit a quarterly record of $4.6 billion,market volatility and the AI investment boom jointly boosted trading and investment banking revenues.。

JPMorgan rose 2.50%: second-quarter net profit surged 41.2% year-over-year to $21.16 billion, with earnings per share at $7.70, significantly surpassing the expected $5.59,setting the highest quarterly profit in U.S. banking history.Equity markets revenue soared 86% year-over-year to $6 billion, investment banking revenue grew 45% to $3.9 billion, and full-year net interest income guidance was raised to $105.5 billion.

Bank of America rose approximately 1.9%:Earnings beat expectations, with record quarterly results in equities trading and investment banking benefiting from a rebound in M&A activity. The market viewed this as a signal that consumer and corporate activity remains resilient.

Citigroup fell 5.3%:Second-quarter net profit was $5.8 billion, up 45% year-over-year; revenue was $24.8 billion, up 14% year-over-year; earnings per share were $3.15.Despite announcing a 12% dividend increase and launching a $30 billion share buyback program, cost pressures overshadowed the earnings strength.。

Wells Fargo & Co fell approximately 2.7%: Despite better-than-expected earnings, investors remain cautious about the quality of its revenue and the sustainability of future growth, leading to noticeable divergence within the banking sector.

Lucid fell approximately 16%:Shares plunged more than 50% intraday after rumors circulated that the company was considering going private or filing for Chapter 11 bankruptcy protection. The company later denied the reports, calling them 'completely false,' and stated it has sufficient liquidity to support operations well into next year, causing the decline to narrow significantly.

Stride fell approximately 5.6%:Anthropic launched Claude for Teachers, offering U.S. K-12 educators free access to advanced AI features, raising market concerns about potential disruption to edtech companies' core businesses.

Berkshire Hathaway-related stocks draw attention:Buffett announced plans to gradually dispose of the remaining Berkshire shares over the next eight years and convert some Class A shares into Class B shares for donation to charitable foundations, with a total market value slightly exceeding USD 5.9 billion. This is not a sell signal in the traditional sense but rather a step forward in long-term philanthropic arrangements and succession planning.

U.S. June PPI data release on July 15 at 20:30 ET:CPI has already opened a window for bulls, but PPI will determine whether the 'disinflation trade' can continue. If PPI also declines, U.S. Treasury yields and the dollar could face further downward pressure, and tech stocks—especially AI hardware—may maintain strength; if PPI rebounds, markets will reprice energy shocks and corporate cost pressures, potentially pushing the VIX higher from around 16.

Kevin Warsh’s congressional testimony and subsequent Fed official remarks on July 15 at 22:00 ET:Warsh has already clearly stated that the cooldown in CPI does not mean 'mission accomplished.' Markets will watch closely to see if he further reinforces a hawkish stance. If he continues to dampen rate-cut expectations and keeps the option of a rate hike this year on the table, rate-sensitive tech stocks could experience volatility; if he acknowledges improving data, U.S. equity bulls would gain stronger policy support.

July 15: Johnson & Johnson, Morgan Stanley, Blackrock, and ASML report earnings.

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