U.S. equity futures moved higher on Tuesday after June inflation figures came in well below expectations, improving investor sentiment following Monday’s broad market sell-off.
The latest inflation report reduced fears that the Federal Reserve may need to keep interest rates elevated for longer, providing support for risk assets, particularly technology stocks.
June CPI Comes in Below Expectations
The U.S. Labor Department reported that consumer prices declined 0.4% in June, following a 0.5% increase in May. Economists had expected only a modest 0.1% decline.
Annual headline inflation slowed to 3.5%, beating expectations for a reading of 3.8%.
Core inflation, which excludes food and energy, was unchanged during the month, while the annual core CPI rate eased to 2.6%, below analysts’ forecasts of 2.8%.
Technology Shares Lead Early Recovery
The weaker inflation figures boosted expectations that the Federal Reserve could adopt a less aggressive policy stance, lifting Nasdaq 100 futures by roughly 1.2%.
The gains followed heavy losses for technology stocks during Monday’s session.
IBM Weakness Offsets Some Optimism
One notable exception was IBM (NYSE:IBM), whose shares dropped more than 22% in premarket trading after preliminary second-quarter results failed to meet investor expectations.
The sharp decline limited gains in Dow Jones futures despite the broader improvement in market sentiment.
Monday’s Sell-Off Driven by Oil and Geopolitics
U.S. markets closed sharply lower on Monday after crude oil prices surged nearly 9% amid renewed military conflict between the United States and Iran.
The U.S. Central Command confirmed additional strikes on Iranian targets, while Tehran launched attacks against several Gulf states, heightening concerns over regional stability.
President Donald Trump also announced the reinstatement of a blockade on Iranian ports and proposed a 20% fee on cargo transiting the Strait of Hormuz as the “Guardian of the Hormuz Strait.”
Semiconductor Stocks Under Pressure
Technology shares were further weighed down by a sharp decline in SK Hynix (USOTC:HXSCL), whose U.S.-listed shares fell more than 9%.
The Philadelphia Semiconductor Index dropped 4.8%, while the NYSE Arca Computer Hardware Index lost 3.3%.
Energy stocks bucked the broader market weakness, benefiting from higher crude oil prices.
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