Cool CPI, ASML Beat Fuel Wall Street’s Record Chase

June CPI cooled to 3.5% and ASML raised its 2026 guide to €43-45B. Morgan Stanley, BlackRock, JNJ report today. PPI at 6:00 PM IST, Warsh to Senate.

TLDR

Wall Street closed higher on Tuesday after June CPI came in materially cooler than consensus and every big bank cleared its Q2 bar. The tape now walks into Wednesday with three fresh catalysts stacked in one pre-market window. ASML has already reported a blowout in Europe with revenue €9.3B and a raised 2026 guide of €43-45B. June PPI drops at 8:30 AM ET (6:00 PM IST), the last major wholesale inflation print before the July 28 to 29 FOMC. Kevin Warsh takes his testimony to the Senate Banking Committee at 10 AM ET after his House debut Tuesday. Morgan Stanley, BlackRock, and Johnson & Johnson headline a busy earnings block. Asian markets flew overnight, with Kospi opening +6.3% and the Nikkei climbing above 68,300. Trump scrapped his 20% Hormuz shipper fee on Tuesday, but the IRGC has threatened wider corridor closures.

Market Regime

The June CPI print rewrote the near-term Fed script in a single move. Headline fell 0.4 percent month over month, the largest one-month drop since April 2020, taking the annual rate to 3.5 percent from 4.2 percent. Core came in flat month over month, dragging the year-over-year rate down to 2.6 percent from 2.9 percent. Both readings were meaningfully cooler than consensus. CME FedWatch shifted from around 42 percent odds of a July hike before the print to roughly 17 percent within hours, and the S&P 500 finished 0.38 percent higher at 7,543.59.

The follow-through test is today’s PPI. Consensus expects headline down 0.1 percent month over month and 6.2 percent year over year, but core PPI year over year is expected to rise to 5.2 percent from 4.9 percent, meaning producer-side pressure is still building even as consumer prices ease. That divergence is exactly the risk Warsh warned about in his House testimony when he said, in effect, that Tuesday’s report is not a signal that inflation is beaten. His Senate reprise today is the market’s chance to hear whether he softens or hardens that framing.

Bullish Factors

• ASML Q2 blowout: Revenue €9.3B beat the top of the €8.4-9B guide; gross margin 54.0 percent beat the 51-52 percent guide. Full-year 2026 revenue guide raised to €43-45B from €36-40B, the third hike of the year. Q3 revenue guided to €11-12B versus €10.37B consensus. Roughly 30 percent capacity expansion planned for 2027 in low NA EUV and DUV immersion.
• Cool CPI clears the near-term runway: Headline -0.4 percent month over month, 3.5 percent year over year; core flat, 2.6 percent year over year. CME FedWatch July hike odds down to about 17 percent from 42 percent a day earlier.
• Hormuz fee scrapped: Trump abandoned the 20 percent shipper fee on Tuesday and replaced it with what he called Trade and Investment Deals with the Gulf States. Crude eased into the US session close.
• Asian follow-through: Kospi opened +6.3 percent and tripped a buy-side sidecar; Nikkei 225 climbed 0.9 percent above 68,300 with Kioxia +6.7 percent and Lasertec +6.9 percent; Topix +1.0 percent, ASX 200 +0.6 percent.
• PayPal M&A pop: PYPL +18.5 percent premarket after sources said Stripe and Advent International offered $60.50 per share to take the company private, valuing it above $53B.
• Bank earnings clean sweep: JPMorgan, Wells Fargo, Bank of America, Citigroup, and Goldman Sachs all beat consensus. Goldman was the standout with EPS of $20.98 versus $14.48 expected and revenue of $20.34B versus $16.13B.

Bearish Factors

• Core PPI expected to accelerate: Consensus has core PPI year over year rising to 5.2 percent from 4.9 percent, while headline eases only marginally. Wholesale pipeline still passing through even as consumer side cools.
• IBM profit warning: Software giant fell about 25 percent Tuesday after warning that enterprise clients are pivoting spend from software and mainframes toward AI infrastructure. The tape read this as a canary for legacy tech into Q2 prints.
• IRGC threat escalation: Iran’s Islamic Revolutionary Guard Corps warned it will close all other export corridors that benefit the US and its allies after Trump reimposed a naval blockade on Iranian ports. US-Iran strikes have now run three straight weekends.
• Sticky services shelter: CPI shelter still 3.3 percent year over year and PPI services expected to keep advancing. The Fed cares far more about this component than about the energy-driven headline.
• S&P 500 within 1 percent of all-time high: The index closed Tuesday at 7,543.59, less than 1 percent below its June record. Rally is vulnerable to any earnings disappointment or hot PPI print.
• Warsh Senate risk: The new Fed chair is on the tape again from 10 AM ET. Any tightening in his framing of core services or shelter can snap the equity bid.

Asian Markets This Morning

The overnight tape was a full risk-on relief rally. South Korea’s Kospi opened +6.3 percent at 8,832 and tripped a buy-side sidecar in Kospi 200 futures, then eased slightly through the session as chip names extended their lead. Japan’s Nikkei 225 climbed 0.9 percent to above 68,300 and the Topix rose 1.0 percent to 4,080, with AI-linked leaders Kioxia (+6.7 percent), Advantest (+4.4 percent), Tokyo Electron (+1.6 percent), and Lasertec (+6.9 percent) driving the move.

SoftBank’s Masayoshi Son extended his 5 trillion dollar a year AI capex thesis at a Tokyo conference, and Japan’s May machinery orders came in softer than expected, confirming that the recovery is being led by AI-linked names rather than domestic capex. Hong Kong’s Hang Seng advanced through the session and mainland China’s Shanghai Composite held its footing. Australia’s ASX 200 finished about 0.6 percent higher, and India’s Nifty 50 futures pointed to a firm open.

What Moved Wall Street Yesterday

The S&P 500 finished up 0.38 percent at 7,543.59 and the Nasdaq Composite added 0.90 percent to 26,107.01, both extending Monday’s oversold bounce as the June CPI print landed materially below consensus. The Dow eked out a 0.02 percent gain to 52,508.66 with IBM down roughly 25 percent after a profit warning that erased about 315 points from the index at the mid-session low. IBM said enterprise clients are moving spend away from software and mainframes toward AI infrastructure, and the tape treated the print as a canary. The Russell 2000 rose 0.39 percent to 2,964.79 as small caps joined the bid on lower hike odds.

Financials led the market after JPMorgan, Bank of America, Wells Fargo, Citigroup, and Goldman Sachs all cleared their bars. Goldman’s beat was the standout at $20.98 EPS versus $14.48 consensus on $20.34B revenue versus $16.13B, and the stock jumped about 9 percent. Semis rebounded on the cool CPI read, with the VanEck Semiconductor ETF up 2.5 percent and the iShares Semiconductor ETF up 4.6 percent. Oil eased into the US close after Trump abandoned his 20 percent Hormuz fee, with WTI up 1.82 percent at $79.56 and Brent up 1.98 percent at $84.95.

Assets in Focus

ASML

The Q2 print is done and it is a blowout on every line. Revenue of €9.3B beat the top of the €8.4-9B guide, gross margin 54.0 percent beat the 51-52 percent guide, and EPS of €7.59 came in above the consensus $7.98. Management raised the 2026 revenue guide for the third time this year to €43-45B from €36-40B, guided Q3 revenue to €11-12B against a €10.37B consensus, and announced roughly 30 percent capacity expansion in low NA EUV and DUV immersion for 2027 with another 30 percent under investigation for 2028. Shares are up 3.8 to 4 percent premarket. The signal from ASML is that hyperscaler AI capex is being locked in through the decade rather than pulled forward and left with an air pocket. TSMC’s print tomorrow before the US open is the next hardware read.

MS

Morgan Stanley reports before the open with consensus of $2.94 EPS and $19.64B revenue. After a Goldman Sachs beat that came in roughly 45 percent above consensus on the earnings line, the informal bar for Morgan Stanley is well above the published number. Trading and wealth management are the two watch items; a strong trading beat plus positive fee-based inflow commentary would extend the financials-led leg of the CPI rally into another session.

PYPL

PayPal is up 18.5 percent in premarket trading after sources said Stripe and Advent International have jointly offered $60.50 per share to take the payments company private, valuing it above $53B. If confirmed on the tape, the transaction becomes the largest fintech take-private on record and puts payments-sector consolidation squarely back on the calendar into the second half.

JNJ

Johnson & Johnson reports before the open with consensus of $2.85 EPS and $25.05B revenue. Focus is on Innovative Medicine pricing power, MedTech margin, and any refresh to full-year guidance ahead of the Kenvue-adjusted year-on-year comps. Not a market-moving name on its own but the read into next week’s UnitedHealth print matters.

NSDQ100

The Nasdaq 100 is riding a semi rebound plus cool CPI plus ASML combo into today’s session. US100 futures were close to flat overnight after Tuesday’s 0.9 percent Nasdaq Composite gain. First resistance sits at the June range top around 26,300; support is at 25,600 (Monday session low) and then at the 25,000 psychological and 50-day cluster. A cool PPI print would confirm the CPI signal and let the index challenge the highs.

XLE

Energy remains the mirror image of the risk trade. Trump’s decision to scrap the 20 percent Hormuz fee eased crude into Tuesday’s US close, but the underlying US-Iran exchange has continued into a third weekend. WTI at $79.56 and Brent at $84.95 into Wednesday keep the sector supported, but any de-escalation headline can unwind the June-July premium fast.

Index Levels to Watch

S&P 500 (7,543.59 close)

• Immediate resistance: 7,600 (all-time high area, June top near 7,648)
• First support: 7,500 (round-number pivot)
• Major support: 7,470 (June breakout retest)

Nasdaq Composite (26,107.01 close)

• Immediate resistance: 26,300 (recent range top)
• First support: 25,873 (Monday close, pre-CPI)
• Major support: 25,500 (Monday intraday low)

Nikkei 225 (approx 68,300 close today)

• Immediate resistance: 69,000 (rising channel top)
• First support: 67,600 (Tuesday close area)
• Major support: 66,000 (last week’s swing low)

Disclaimer

This article is for educational and informational purposes only. It is not investment advice and should not be treated as a buy, sell, or hold recommendation for any security or financial product. Trading in futures and similar instruments involves significant risk including the potential loss of capital. Past performance is not indicative of future results.

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