US Inflation Cools as Corporate Earnings Diverge

The cooling of headline inflation, driven largely by volatile energy costs, provided a temporary reprieve for investors. More significantly, the core CPI index recorded a marginal 0.02% decline—the first such drop in over six years—bringing the annual core rate to 2.6%. While this data point softened the hawkish stance of market participants, Fed Chair Kevin Warsh maintained a firm commitment to the 2% inflation target during recent congressional testimony.

Corporate results are painting a complex picture of the current economic environment. IBM shares plummeted 25% following a sharp earnings miss and an admission that shifting business models toward AI infrastructure has cannibalized software service budgets. Conversely, the chip industry remains a bright spot, with ASML reporting robust results and raising annual revenue forecasts, mirroring similar optimism from TSMC. Meanwhile, the financial sector is showing resilience, with Goldman Sachs shares surging 9% on the back of strong trading volumes and a renewed wave of IPO activity.