A trader works on the floor of the New York Stock Exchange (NYSE) in New York on July 14, 2026.

Timothy A. Clary | Afp | Getty Images

The S&P 500 rose on Tuesday, boosted by semiconductor stocks, after June inflation data came in weaker than expected.

The broad market index was up 0.4%, while the Nasdaq Composite advanced 0.9%. The Dow Jones Industrial Average traded around the flatline. Shares of International Business Machines weighed on the 30-stock index, with the stock down 25% after the company warned second-quarter profits will be lower than expected due to soft demand in its software and infrastructure businesses.

Semiconductor stocks rebounded after a sell-off in the previous session. The VanEck Semiconductor ETF (SMH) traded nearly 2% higher. Applied Materials and Teradyne gained more than 3%, and Lam Research moved up 4%. Micron Technology increased more than 2%. STMicroelectronics added more than 1%.

The consumer price index in June fell 0.4% on the month, bringing the annual inflation rate to 3.5%. Economists polled by Dow Jones had called for a 0.2% decline last month and expected the inflation rate to come in at 3.8%.

With easing inflation, expectations that the Federal Reserve would hike interest rates this year reduced following the release. Odds that the central bank would hike rates at its July meeting dropped to 17% from 42% the day prior, per the CME's FedWatch Tool. However, traders are still expecting a hike at the meeting in September, seeing a 63% chance that the target rate will be a quarter or half point higher.

"Tuesday's weaker-than-expected CPI print suggests the inflation surge driven by the Iran war is fading, but this may just be a temporary relief as tensions have escalated in recent days," said Skyler Weinand, chief investment officer at Regan Capital. "The weaker inflation data likely keeps the Fed on hold for now and reduces any rate hike odds, but we remind investors that almost every communication that has emanated from Chair Warsh during his short tenure so far has been hawkish."

"Warsh is looking to get consumer prices under control and the best tool the Fed currently has is raising interest rates," he added.

Fed Chairman Warsh testified in front of Congress on Tuesday, where he said that "the inflation surge of the last five years will be a thing of the past."

Oil prices were off their highs after President Donald Trump abandoned his demand that ships will pay a 20% fee to move through the key Strait of Hormuz waterway. U.S. crude, which earlier topped $80 per barrel, was last up 1% at above $79, while international benchmark Brent crude futures added 2% to above $85 a barrel.

This comes after Trump on Monday said he would reinstate a blockade on Iranian shipping through the strait.

Goldman Sachs led notable bank stocks higher, popping 8% after the bank posted an earnings beat. Big banks JPMorgan Chase and Bank of America released their Q2 results as well, with both seeing a gain of more than 1%.