U.S. equity markets traded in a narrow range on Tuesday, with major indices largely flat as investors positioned ahead of Nvidia's highly anticipated earnings release after the close. The S&P 500 Information Technology sector rose 0.3%, while the Industrial sector gained 1%, but gains were capped by declines in Nvidia, which fell 0.4% ahead of its report. Microsoft and Apple each advanced 0.5%. The Dow Jones Industrial Average slipped 0.04% to 53,555.86, the S&P 500 edged up 0.03% to 7,679.52, and the Nasdaq Composite declined 0.06% to 26,137.16.
The subdued trading session reflected uncertainty tied to persistent inflation pressures, which tempered expectations for Federal Reserve rate cuts. Annual U.S. inflation held at 3.7% year-over-year in July, slightly above the 3.6% forecast by analysts. The data reinforced bets on a potential September rate hike, with futures pricing in a 44% probability of such a move, up from roughly 36% just before the release. The U.S. economy grew at a revised 1.5% annualized pace in the second quarter.
Jeff Buchbinder, Chief Equity Strategist at LPL Financial, noted that inflation remains a persistent drag on rate-cut expectations, though he emphasized that corporate earnings continue to support market strength. "We are clearly in a period where inflation is persistent and temporarily exerting upward pressure on interest rates — a key factor keeping this bull market going," Buchbinder said. "This market is a tug-of-war between earnings and interest rates, and so far, earnings are winning. As long as fundamentals remain solid, the market will hold up well."
