The Latest Inflation Data Will Drop on July 14. Here's Why It's a Big Deal for the Stock Market
Investors will get their latest look at inflation when the Bureau of Labor Statistics releases the June Consumer Price Index (CPI) reading at 8:30 a.m. on July 14. The CPI tracks the prices of a range of consumer goods and services and serves as a key gauge of inflation for the market. In May, inflation rose significantly. The CPI increased 0.5% seasonally adjusted during the month and was 4.2% higher year over year. Stripping out more volatile food and energy prices, core CPI was 2.9% higher year over year. The Federal Reserve Bank of Cleveland's Nowcasting tool expects headline CPI to fall nearly 0.1% on the month and be up about 3.9% year over year. Meanwhile, core CPI is projected to rise 0.2 for the month and be up 2.85% year over year. As of this writing, the market is placing a 65% likelihood that the Fed will hold rates steady.
Morning Bid: Oil boils
With Iranian missiles hitting ships in the Gulf again amid a third night of U.S. strikes, Hormuz traffic has slowed to a two-month low, according to shipping data. World crude oil prices are now well above $80 per barrel again after leaping more than 9% on Monday and extending those gains early on Tuesday, trading at levels last seen before the interim ceasefire deal was signed in mid-June. The renewed jump in crude prices somewhat reduces the impact of the headline U.S. CPI release today. It's expected to have fallen back from three-year highs above 4% owing to the recent energy price retreat, but the latest fighting makes that moot. Investors' focus will be on core inflation, which is still close to 3%. Fed Governor Chris Waller said on Monday that the Fed is not going to get this back to target simply by staring at it. It will have to act. Fed Chair Kevin Warsh will give his first testimony to Congress later on Tuesday. He's no fan of forward guidance, which may be wise at the moment, so markets are unlikely to get much of a steer. But futures still have a Fed hike priced by year-end and a significant chance of one as soon as this month. Stocks are under pressure from the new energy and interest-rate tensions, with chip stocks still taking a beating as the U.S. quarterly earnings season kicks off this week. The big banks are due to report today. South Korean chipmaker SK Hynix, which listed ADRs on Friday, tumbled sharply again on Monday, giving back all of its Friday gains.
TSMC's June sales drive revenue surge of 68% ahead of earnings report
TSMC said on Monday that June revenue rose 67.9% year on year to NT$398.27 billion (€10.8bn), bringing the first-half of the year revenue to NT$2.4 trillion (€65.4bn), a 35.6% increase from the same period in 2025. At its April earnings presentation, TSMC said it expects full-year 2026 revenue to grow by more than 30% in US dollar terms and projected capital expenditure of between $52 billion (€45.5bn) and $56 billion (€49bn) as it expands manufacturing capacity to meet AI-driven demand. Reports have indicated that Nvidia has reserved roughly 60% of TSMC's advanced chip-packaging capacity for 2026, highlighting continued supply constraints across the AI semiconductor market.
TSMC reports record June revenue, second quarter sales top guidance
Taiwan Semiconductor Manufacturing Co (ADR) (NYSE:TSM) reported record June revenue of NT$442.7 billion (about US$13.2 billion), as strong demand for its chips helped lift second-quarter sales above the high end of the company's guidance. June revenue increased 67.9% from a year earlier and 6.2% from May, marking the highest monthly revenue in the company's history, according to the company's monthly sales report released Monday. For the second quarter, revenue totaled NT$1.27 trillion (approximately US$39.6 billion), up 36% from the same period last year. The result exceeded the upper end of TSMC's previously issued guidance of $39 billion to $40.2 billion. Revenue for the first six months of 2026 reached NT$2.40 trillion, an increase of 35.6% from the corresponding period in 2025.
Bank of America Q2 2026 earnings: record equities trading, profit jumps
Bank of America reported second-quarter net income of $9.1 billion, up 27% from a year earlier, as a record quarter for its stock-trading desk and a rebound in dealmaking drove revenue to $31.6 billion, up 15%. Diluted earnings per share came in at $1.21, up 34% from the year-ago quarter. Analysts had expected earnings per share of $1.13 and revenue of $30.8 billion, according to Barron's. The bank's Global Markets division was the standout performer. Equities trading revenue surged 70% to $3.6 billion, with the bank citing robust client activity and gains in both derivatives and cash products. Fixed-income, currencies and commodities revenue rose 9% to $3.5 billion. Combined, total sales and trading revenue reached $7.1 billion, up 33% year over year, marking the 17th consecutive quarter of year-over-year growth. Investment banking also contributed to the quarter's strength. Total investment banking fees, excluding self-led deals, rose 50% to $2.1 billion, reflecting gains across debt underwriting, advisory and equity underwriting, the company said. Net interest income, which captures the spread between what the bank collects on loans and what it pays out to depositors, increased 9% to $16 billion. "Every business segment reported double digit net income growth and strong returns on equity," Chief Executive Officer Brian Moynihan said in a statement. "Near-term, pipelines remain strong, and commercial borrowing has picked up." All four of the bank's business segments posted higher net income. Consumer Banking earned $3.3 billion, up from $3.0 billion a year earlier, on revenue of $11.3 billion. Global Wealth and Investment Management posted net income of $1.4 billion on revenue of $6.9 billion, up 16%, as client balances reached $4.9 trillion. Global Banking earned $2.0 billion, and Global Markets contributed $2.6 billion. Credit quality continued to improve. The provision for credit losses fell to $1.4 billion from $1.6 billion in the second quarter of 2025, and the net charge-off ratio dropped to 0.47% from 0.55% a year earlier, the company said. The bank returned $8 billion to shareholders during the quarter through dividends and stock repurchases. Book value per common share rose 7% to $39.34.
JPMorgan beats estimates on strong banking fees
Earnings per share of $7.70 beat the consensus estimate of $5.55. Revenue reached $57.35 billion, surpassing the $50.61 billion estimate and marking a 28% increase from $44.91 billion in the same quarter last year. The reported earnings per share of $7.70 included significant items totaling $1.56 per share, consisting of a $4.6 billion net gain related to Visa shares and $1.0 billion in gains on certain equity investments. Excluding these items, net income was $16.9 billion, up 13% from the prior year. The bank's strong performance was driven by elevated market activity across its businesses, with each line of business achieving record revenue. Markets revenue surged 35% to $12.1 billion, with Equity Markets revenue jumping 86% due to strong client activity and trading performance. Investment Banking fees increased 30% to $3.3 billion, reaching the highest level since 2021. The Corporate & Investment Bank generated revenue of $24.9 billion, up 27% from the prior year. Consumer & Community Banking revenue rose 8% to $20.3 billion, while Asset & Wealth Management revenue increased 19% to $6.9 billion. Assets under management reached $5.1 trillion, up 18% YoY.
Wells Fargo climbs premarket after strong Q2 earnings beat
The bank posted earnings per share of $2.00, well above the $1.72 analysts had forecast, on revenue of $22.62 billion versus a $21.87 billion consensus estimate. Interest income rose about 5% from a year earlier, while Markets revenue surged roughly 24%. Corporate and Investment Banking revenue grew 16%, and Wealth and Investment Management rose 13%, with the company saying all operating segments delivered strong growth. Total expenses rose just 2%, with non-revenue-related expenses down year-over-year, which Wells Fargo said drove positive operating leverage.
IBM forecasts preliminary Q2 revenue below estimates as spending shifts to AI
IBM's preliminary second-quarter revenue forecast came below Wall Street estimate on Tuesday, as customers prioritized spending on AI infrastructure, including servers, storage and memory purchases, sending its shares slumping 17% in premarket trading. The results reflect an industry-wide shift in technology spending toward AI infrastructure, reducing budgets for traditional software. According to the preliminary results, the company expects revenue of $17.2 billion during the quarter, compared with analysts' estimate of $17.86 billion, according to data compiled by LSEG. Adjusted earnings per share is expected to be $2.93, compared with the estimate of $3.02.
AI Costs Keep Rising As Morgan Stanley Ups CapEx Estimates For Amazon, Meta
Spending on AI data centers by cloud hyperscalers could reach $1.4 trillion by 2028, analysts with Morgan Stanley said Monday. The investment bank raised its estimates for capital expenditures by Meta Platforms and Amazon — with returns on AI spending a key debate for both stocks. Morgan Stanley analyst Brian Nowak said in a client note that he expects Meta's capex to reach $225 billion in 2027 and $250 billion in 2028, up 29% and 22% from his prior estimates.
Nvidia, Micron, and other chip players are poised to become cash-producing machines
Nvidia (NVDA), Micron (MU), Broadcom (AVGO), and Applied Materials (AMAT) are expected to generate a record $430 billion in combined free cash flow over the next 12 months, according to BofA (see chart below). That would be more than triple what they generated just two years ago as the companies see unprecedented demand for their AI chips. By contrast, the combined free cash flow of hyperscalers Amazon (AMZN), Alphabet (GOOG, GOOGL), Meta (META), Microsoft (MSFT), and Oracle (ORCL) is projected to turn negative for the first time on record. That represents a massive reversal from the $260 billion peak in free cash flow reported by these companies in 2024. Wall Street is growing increasingly impatient with Big Tech's capital expenditures on artificial intelligence, projected to balloon 70% year over year and exceed $700 billion in 2026.
Meta's data center costs are skyrocketing. Here's what you need to know.
Meta (META) raised the budget for its Louisiana data center from $27 billion to $50 billion. CNBC has a story, Meta's Louisiana data center project is going to cost more than 50 billion dollars. That is higher than the 27 billion revealed back in October. It is a 5 gigawatt data center. What does that actually mean, Dan? How much power is that? Yeah, that's hundreds and hundreds of thousands of of homes. Uh I think the going kind of estimate for 1 gigawatt is around 750,000 to 800,000 homes uh could be powered using that. So that's a lot of houses uh that you could power uh with this data center. Um, it you know, this also comes as, you know, Mark Zuckerberg spoke to Bloomberg uh saying that they're absolutely looking into selling compute capacity, uh, as well as, you know, obviously investing in their own AI capabilities.
$50 Billion Is About to Flood Into Defense Stocks: Here’s Who Cashes In
NOC's Triton deal anchors NATO's $50B order wave while LMT's record $194B backlog shows pledges converting into signed, multi-year contracts. McGinn flags three gates before NATO pledges become revenue: U.S. congressional approval, European parliamentary votes, then actual contracts. Only backlog proves real business. Lockheed Martin (NYSE:LMT) is the clearest example of pledge-to-paper conversion. In its Q1 filing, CEO Jim Taiclet said the company signed framework agreements for advanced Patriot Missile, THAAD, and PrSM that will support raising production rates to 3 to 4 times current levels. That is a multi-year purchase commitment. Lockheed's backlog closed 2025 at a record $194 billion. General Dynamics (NYSE:GD) shows the same conversion, with a consolidated Q1 book-to-bill of 2-to-1 and total estimated contract value climbing to $188.4 billion from $178.9 billion. GD shares are up 9.75% YTD and 23% over the past year, so much of the good news is already in. The Pentagon's FY2027 request backs this up with real dollars. The DoW budget book earmarks $20.2 billion for the Defense Credit Account and over $100 billion in Defense Industrial Base investments, including $72.3 billion for Industrial Base Analysis and Sustainment and Defense Production Act Title III. That is munitions and hypersonics money. CEO Eric DeMarco told investors on the Q1 call that "Fiscal 2027 National Security spend is currently projected to be $1.5 trillion, an approximate $400 billion increase above Fiscal Year 2026" and that the Department plans to spend the entire $156 billion Reconciliation Bill defense funding in fiscal 2026, covering Kratos' Valkyrie CCA, solid rocket motors, and hypersonics. Kratos beat Q1 EPS estimates by 23%, raised FY26 revenue guidance to $1.70-$1.76 billion, and announced a 100,000-square-foot expansion in Oklahoma City to boost Valkyrie production.