The Nasdaq closed on a fourth-consecutive record high in five days on an explosive 4 percent gain in Nvidia which continues to demonstrate its unparalleled capacity to move the market in a single stock, even as other big-name indexes did battle under the burden of mixed earnings and inflation worries. The wide decline in Technology companies versus old economy businesses brought home how the market is biased to the stories about Artificial Intelligence as money piled into plays on semiconductors even though in general bank profits were good with abandonment by investors of banking stocks.
Nvidia Drives Technology Rally
The Nasdaq Composite .IXIC 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.
Inflation and Market Response
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 .SPX and the Dow Jones Industrial Average .DJI.
At 1:52 p.m. EDT, the Nasdaq Composite .IXIC had gained 122.51 points, or 0.59%, to 20,762.84. However, the Dow Jones Industrial Average .DJI fell 336.57 points or 0.76% to 44,123.08, and the S&P 500 .SPX lost 5.93 points or 0.09% to 6,262.63.
Semiconductor Sector Strength
The Nasdaq’s increase came primarily from artificial intelligence-chip leader Nvidia NVDA.O, 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 AMD.O and Super Micro Computer SMCI.O rising more than 6.7% each.
The semiconductor index .SOX also advanced 1.5%, to its highest point in a year, while the S&P technology index .SPLRCT climbed by the same percentage to hit a record high.
Banking Sector Disappointments
Meanwhile, Wall Street opened the second-quarter earnings season on a somber note, with banking stocks whipsawing in volatile trade.
JPMorgan Chase JPM.N slipped 0.7% despite raising its 2025 net interest income outlook, while Wells Fargo WFC.N fell 6.3% even as its profit rose on reduced loan-loss reserves. BlackRock BLK.N 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 .BKX sank to a two-week low, down 1.1%.
Bucking the trend, Citigroup C.N 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.
Federal Reserve Policy Outlook
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.
The high-flying performance in the market by Nvidia also reveals the risky consolidation of the equity market leadership to a few of AI driven technology trades, which pose as a shaky foundation of stability within the market as the traditional sectors struggle to retain investor attention despite strong fundamentals. The overall difference in semiconductor euphoria and banking sector malaise highlights a market that is all the more divided against the traditional valuation measures, and stock purchases are primed on narratives over earnings and could lead to unsustainable levels in the sense that positive growth identifies over value stocks that can potentially harm market depth.
GCN.com/Reuters.