Nvidia powers Nasdaq to fresh record, as inflation and earnings data weigh elsewhere

By David French

(Reuters) -The Nasdaq Composite advanced to its latest record high on Tuesday, powered by a jump in heavyweight Nvidia's shares, while the other Wall Street benchmarks were sluggish as traders digested a key inflation report and a flurry of bank earnings.

Should gains on the Nasdaq hold, it would be the fourth session in five that the technology-heavy index has posted a record close, and the eighth time since June 27.

Markets have been buoyant in recent weeks. Investor concerns that the U.S. economy would be tarnished by President Donald Trump's policies, including major tariff announcements, have started to abate, allowing Wall Street to move higher.

This week was expected to be a significant test of that improving sentiment, with the start of second-quarter earnings season and inflation reports that were forecast to reflect sellers starting to pass on higher tariff-related costs.

The first of these reports showed U.S. consumer prices posted their biggest jump in five months in June, hinting that tariffs may be starting to heat up inflation. Still, underlying inflation stayed moderate, offering some reassurance despite the headline spike.

"The CPI report came in a little better than expected, but it's backwards-looking, so the market is still concerned that there will be inflationary pressures building because of tariffs," said Chris Zaccarelli, chief investment officer at Northlight Asset Management.

He added the news could be used by some investors to take profits after the recent good run, which would explain declines on both the S&P 500 and the Dow Jones Industrial Average.

At 1:52 p.m. EDT, the Nasdaq Composite had gained 122.51 points, or 0.59%, to 20,762.84. However, the Dow Jones Industrial Average fell 336.57 points or 0.76% to 44,123.08, and the S&P 500 lost 5.93 points or 0.09% to 6,262.63.

The Nasdaq's increase came primarily from artificial intelligence-chip leader Nvidia, which rose 4% after unveiling plans to resume sales of its H20 AI chip to China.

The news buoyed other chipmakers, with Advanced Micro Devices and Super Micro Computer rising more than 6.7% each.

The semiconductor index also advanced 1.5%, to its highest point in a year, while the S&P technology index climbed by the same percentage to hit a record high.

Meanwhile, Wall Street opened the second-quarter earnings season on a somber note, with banking stocks whipsawing in volatile trade.

JPMorgan Chase slipped 0.7% despite raising its 2025 net interest income outlook, while Wells Fargo fell 6.3% even as its profit rose on reduced loan-loss reserves. BlackRock notched a new milestone, managing a record $12.53 trillion in assets amid optimism over trade deals and rate cuts, yet its shares slid 5.5%.?

The KBW Bank Index sank to a two-week low, down 1.1%.?

Bucking the trend, Citigroup climbed 3.4% after its traders delivered a windfall that boosted second-quarter profit.?

Northlight's Zaccarelli said the differing share performance was less about Tuesday's broadly positive numbers and more a reflection of how they matched up with investors' existing expectations for each bank.

In other news, at least four Fed officials including Board Governor Michael Barr were scheduled to speak on Tuesday, potentially offering fresh clues on the central bank's next steps.

Hopes for a July rate cut have all but vanished, and bets on a September move dipped to 55% from 60% after the latest inflation data, according to CME FedWatch.

(Reporting by David French in New York; Additional reporting by Pranav Kashyap and Nikhil Sharma in Bengaluru; Editing by Pooja Desai, Maju Samuel and Matthew Lewis)