ASX set to fall as inflation sends Wall Street lower. Nvidia jumps

8 hours ago 2

By Stan Choe

July 16, 2025 — 5.18am

US stocks are falling on Tuesday after an update on inflation hurt Wall Street’s hopes for lower interest rates. But indexes are staying close to their records thanks to Nvidia, the market’s most influential stock.

The S&P 500 was virtually unchanged in midday trading and just a bit below its all-time high, even as more than four out of every five stocks within the index fell. The Dow Jones was down 253 points, or 0.6 per cent, as of noon Eastern time, and the Nasdaq composite was 0.7 per cent higher and on track to set another record.

Wall Street retreated after inflation came in higher than expected but Nvidia helped prop up indexes.

The Australian sharemarket is set to retreat, with futures at 5.06am AEST pointing to a loss of 56 points, or 0.7 per cent, at the open. The ASX rose by 0.7 per cent on Tuesday. The Australian dollar is 0.5 per cent lower at 65.15 us cents at 5.17am.

US stocks felt pressure from a report showing inflation in the United States accelerated to 2.7 per cent last month from 2.4 per cent in May. Economists pointed to increases in prices for clothes, toys and other things that tend to get imported from other countries. Their prices could be rising because of the tariffs that President Donald Trump has imposed on countries worldwide in hopes of getting them to open their markets further to US products.

“Inflation has begun to show the first signs of tariff pass-through,” according to Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.

To be sure, the inflation rate reported on Tuesday morning wasn’t far from what economists expected. And an underlying measure of inflation that economists think is a better predictor of future trends accelerated by less than feared.

Altogether, the data helped caused Treasury yields to yo-yo a few times in the bond market before they began rising.

The yield on the 10-year Treasury climbed to 4.47 per cent from 4.43 per cent late Monday. The yield on the two-year Treasury, which more closely tracks expectations for what the Federal Reserve will do with short-term interest rates, rose to 3.94 per cent from 3.90 per cent.

A further acceleration in inflation could tie the hands of the Fed, which has kept interest rates on hold so far this year, because lower rates can give inflation more fuel, along with a boost for the economy. Wall Street loves lower interest rates because they goose prices higher for stocks and other investments, and Trump himself has been clamouring for the Fed to cut more quickly.

Fed Chair Jerome Powell, though, has been adamant that he wants to wait for more data about how tariffs affect the economy and inflation. Following Tuesday’s inflation report, traders are still overwhelmingly betting that the Fed will cut its main interest rate by the end of the year. But they pulled back their bets on the number of potential cuts, compared with a day before, according to data from CME Group.

On Wall Street, tech stocks were the outliers and rose after Nvidia said the US government assured it that licenses will be granted for its H20 chip again and that deliveries will hopefully begin soon. Nvidia’s 4.4 per cent gain was by far the strongest force pushing upward on the S&P 500.

Earlier this year, Nvidia said that US restrictions on the chips used in artificial-intelligence development chiselled billions of dollars off its results for the first quarter of the year.

Stocks of big US banks, meanwhile, were mixed following their latest profit reports.

JPMorgan Chase slipped 0.4 per cent despite reporting a stronger profit than analysts expected, as CEO Jamie Dimon warned of risks to the economy because of tariffs and other concerns.

Citigroup rose 3 per cent following its better-than-expected profit report. But Wells Fargo fell 5.4 per cent following its own, as it trimmed its forecast for an important way that it makes money.

In stock markets abroad, indexes slipped in Europe after a mixed session in Asia. Indexes rose 1.6 per cent in Hong Kong but fell 0.4 per cent in Shanghai after a report said China’s economic growth slowed only slightly last quarter despite pressure from Trump’s tariffs.