Shares were up modestly yesterday after softer than expected US inflation data and strong second-quarter earnings from major banks, while oil prices rose for a second day as the US and Iran battled for control of the Strait of Hormuz.
The US Consumer Price Index increased by a less than expected 3.5 per cent in the 12 months through June after surging 4.2pc in May.
On a monthly basis it fell 0.4pc after advancing in May and compared with analyst expectations for a 0.1pc month over month dip.
The easing mostly reflects last month’s retreat in petrol prices from multi-year highs as a fragile US-Iran ceasefire took hold last month.
Shares of big US banks rallied after quarterly results were boosted by strong trading revenue and corporate deal making.
Bank of America and Citigroup exceeded Wall Street estimates for second-quarter profit and JPMorgan Chase reported a record quarterly profit, pushing its shares to an all-time high.
While share traders appeared to shrug off the Middle East escalation, Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, said that geopolitics is still an overhang for equity investors.
“It depends how long this stage of this ongoing war lasts. Right now the market is discounting this issue but it’s lingering. It’s dampening market strength from the very strong results we saw from financial companies,” he said, adding that “the favourable CPI number we see could be very different next month given what we’re seeing in the oil market.”
The Dow Jones Industrial Average was down 27.79 points, or 0.05pc, at 52,474.12, the S&P 500 was up 23.89 points, or 0.31pc, at 7,538.92, and the Nasdaq Composite rose 194.64 points, or 0.75pc, to 26,067.81.
MSCI’s gauge of stocks across the globe rose 4.35 points, or 0.39pc, to 1,121.21.
The pan-European STOXX 600 index fell 0.04pc.
In currencies, the dollar broadly weakened after the softer-than-expected US inflation data tempered expectations for Fed policy tightening.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.52pc to 100.74, with the euro up 0.55pc at $1.1444.
Against the Japanese yen, the dollar weakened 0.28pc to 161.98.
US Treasury yields also fell in response to the inflation data.
The yield on benchmark US 10-year notes fell 3.46 basis points to 4.575pc, from 4.61pc late on Monday, while the 30-year bond yield slipped 1.04 basis points to 5.0876pc.
The two-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 6.96 basis points to 4.193pc.
In precious metals, spot gold was up 2.02pc at $4,080.49 an ounce.
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