Financial Markets                      07/14 09:32

   Stocks are holding steadier on a calmer Wall Street Tuesday after a report 
showed U.S. inflation was not as bad last month as economists expected. 

   NEW YORK (AP) -- Stocks are holding steadier on a calmer Wall Street Tuesday 
after a report showed U.S. inflation was not as bad last month as economists 
expected. That was even though oil prices continue to jump on worries that the 
United States and Iran may return to all-out war.

   The S&P 500 added 0.2% to recover some of its 0.8% loss from the prior day. 
The Dow Jones Industrial Average was up 142 points, or 0.3%, as of 10:15 a.m. 
Eastern time, and the Nasdaq composite was 0.3% higher.

   Stocks got help from easing yields in the bond market, which fell after a 
report said U.S. consumers had to pay prices for gasoline, food and other costs 
of living that were 3.5% higher last month than a year earlier.

   While that's more than nearly everyone would like, it wasn't as bad as May's 
4.2% inflation rate or the 3.9% that economists expected for June. Less bad 
inflation could take pressure off the Federal Reserve, which is considering 
raising interest rates.

   Higher rates can keep a lid on inflation, but they also slow the economy and 
hurt prices for all kinds of investments.

   Following the inflation report, traders see less than a 15% chance that the 
Federal Reserve will raise its main interest rate at its next meeting later 
this month. That's down from the nearly 42% probability seen the day before, 
according to data from CME Group.

   Rebounds for several big, influential stocks of computer chip companies also 
helped steady the market. They've been swinging sharply in recent weeks on 
worries that they shot too high in the euphoria around artificial-intelligence 
technology.

   Micron Technology rose 1.8%, and Nvidia added 0.5%. A day before, they were 
two of the heaviest weights on the S&P 500 after falling 4.4% and 3.5%, 
respectively.

   To be sure, big risks remain for inflation. Fighting in the Middle East is 
threatening to close or slow traffic in the Strait of Hormuz, the narrow 
waterway that oil tankers use to ship crude from the Persian Gulf to customers 
worldwide.

   The price for a barrel of Brent crude, the international standard, rose 
another 2.6% to $85.43. Following its leap of nearly 10% on Monday, it's back 
to where it was before the United States and Iran signed their interim deal to 
halt their fighting in the middle of last month.

   Wall Street's other big focus this week is the start of earnings reporting 
season, as companies tell investors how much profit they made from April 
through June.

   The pressure is on companies to deliver big growth to justify how high their 
stock prices have jumped. Indexes are near records despite the recent swings 
caused by worries about AI stocks.

   Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs and Wells Fargo 
all on Tuesday reported fatter profits for the latest quarter than analysts 
expected. Their reports showed strength for their trading desks and suggested 
spending by U.S. consumers remains resilient.

   Their stocks rose following the results, including jumps of 8.1% for Goldman 
Sachs and 2.1% for Bank of America.

   On the losing end of Wall Street was IBM, which was the single heaviest 
weight on the S&P 500. It dropped 24.8% after CEO Arvind Krishna said 
performance for its software and infrastructure businesses fell short of 
expectations last quarter.

   IBM's customers in late June shifted their spending toward servers, storage 
and memory to get ahead of expected price increases caused by the AI boom.

   "These conditions require our teams to execute perfectly, and this quarter 
we faltered," Krishna wrote in a letter to investors. "We did not adapt and 
move quickly enough, and numerous large deals failed to close on the timelines 
we expected, driving the majority of our shortfall."

   In the bond market, the yield on the 10-year Treasury dropped to 4.57% from 
4.62% late Monday. It halts a run higher from 3.97% before the war with Iran 
began.

   Fed Chair Kevin Warsh will answer questions from lawmakers on Capitol Hill 
later in the day for the first time since taking over leadership of the central 
bank. In his prepared testimony, he pledged to make high inflation "a thing of 
the past" but offered no signal about the Fed's next steps.

   Besides the Fed's upcoming meeting on interest rates, July is full of 
potential flashpoints that could shake the stock market and potentially knock 
it lower before rising again by the end of the year, according to Thomas 
Carroll, strategist at Stifely Nicolaus. That includes Middle East tensions, 
earnings reports from the biggest U.S. stocks and volatile jobs data.

   In stock markets abroad, indexes were mixed in Europe following a stronger 
finish in Asia.

   Japan's Nikkei 225 added 0.7% after SoftBank Group Corp. rose 3.3%. It's a 
big investor in AI, and Chairman Masayoshi Son gave a speech at a company event 
in Tokyo where he derided the idea that there is a bubble in investments in 
capacity for AI.

   Stocks rose 1.4% in Shanghai after the government reported China's exports 
jumped 27% in June from a year earlier as AI drove strong demand for computer 
chips and other technology.

   ___

   AP Business Writer Elaine Kurtenbach contributed to this report.

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