Tuesday, July 14, 2026
Bank Earnings Blow Past Estimates and CPI Cools as Warsh Makes His Fed Debut Amid Iran Oil Shock
Key Indicators
S&P 500
7,515.34
-60.05 (-0.79%) (down)Nasdaq Composite
25,873.18
-408.43 (-1.55%) (down)Dow Jones Industrial Average
52,498.64
-138.37 (-0.26%) (down)10-Year Treasury Yield
4.62%
+0.06 pts (+1.3%) (up)VIX
17.16
+2.13 (+14.2%) (up)WTI Crude Oil
$74.51
+3.10 (+4.3%) (up)Market Recap
Wall Street slides Monday as IBM craters 23% and Trump reinstates an Iran shipping blockade
U.S. stocks fell broadly on Monday: the S&P 500 dropped 0.79% (60.05 points) to 7,515.34, the Nasdaq Composite tumbled 1.55% (408.43 points) to 25,873.18, and the Dow Jones Industrial Average slipped 0.26% (138.37 points) to 52,498.64. IBM was the session's biggest drag, plunging 23% — its worst day since the 1987 crash — after warning that adjusted second-quarter earnings would come in at $2.93 a share on $17.2 billion in revenue, both short of the $3.01 and $17.86 billion Wall Street expected. CEO Arvind Krishna said clients shifted spending toward servers, storage, and memory chips to lock in supply ahead of expected price increases, pulling budget away from IBM's software business. Chip stocks also reversed hard: SK Hynix, which had surged 13% in its record Nasdaq debut on Friday, gave back roughly 10% of those gains. The session's other driver was oil: President Trump announced the U.S. would reinstate a blockade on Iranian shipping through the Strait of Hormuz and impose a 20% transit fee on cargo moving through it, sending WTI crude up 4.3% to $74.51 a barrel and the VIX up 14.2% to 17.16, its highest close in weeks.
June CPI cools sharply on falling energy prices, but sticky core inflation keeps the Fed's hike odds alive
June CPI fell a seasonally adjusted 0.4% for the month, pulling the year-over-year rate down to 3.5% from 4.2% in May and coming in well below the 3.8% economists expected. The move was almost entirely an energy story: the energy index slumped 5.7% in June, its steepest monthly drop since April 2020, as gasoline prices fell more than 9%. But core CPI, which strips out food and energy, told a different story: it rose at a 2.6% annual pace, down only modestly from 2.9% in May, with shelter still rising and services holding largely flat. Traders trimmed the odds of a Fed rate hike in September to 63% from roughly 75% a day earlier, according to CME FedWatch, but didn't abandon the hike call — Fed Governor Christopher Waller said it would take several more months of soft readings to convince him inflation is heading back to the Fed's 2% target.
Big banks blow past estimates on trading and dealmaking; Citigroup falls despite a decade-best quarter
All five of the largest U.S. banks reported second-quarter results Tuesday morning, and most crushed expectations. JPMorgan Chase posted EPS of $6.14 versus the $5.85 Street estimate on revenue of $58.02 billion, far above the $50.19 billion expected — one of the bank's largest beats in years — with CEO Jamie Dimon noting AI has helped cut headcount by as much as 40% in certain roles. Wells Fargo earned $2.00 a share against a $1.72 estimate as revenue rose 9% to $22.6 billion, driven by a 35% jump in investment-banking fees. Goldman Sachs posted a record $7.42 billion in equities-trading revenue — the largest quarterly total for any bank on record — pushing EPS to $20.98 versus the $14.48 expected; the stock rose 1.4%. Bank of America beat with EPS of $1.21 versus $1.13 expected on $31.7 billion in revenue, though shares were roughly flat. Citigroup posted its best quarterly revenue in a decade but still fell about 2%, as investors focused on other parts of the report.
Fed Chair Warsh makes his congressional debut, pledges to 'get monetary policy right'
Kevin Warsh delivered his first semiannual Monetary Policy Report testimony as Fed chair before the House Financial Services Committee Tuesday, pledging to 'get monetary policy right' and defeat inflation that has challenged the central bank for five years. He also highlighted the strength of the U.S. economy and the benefits of business investment, particularly in AI, while notably declining to offer an explicit rate-path forecast — consistent with his long-standing skepticism of forward guidance. Warsh faces a Senate Banking Committee follow-up Wednesday. His remarks land at a delicate moment: nine of 18 FOMC participants now pencil in at least one rate hike for 2026, and the Fed's next policy decision comes July 28-29 — Warsh's first meeting running the committee.
Iran conflict enters a third day as oil pushes toward $87 and Trump moves to formalize a Hormuz blockade
U.S. Central Command carried out strikes on Iran for a third consecutive day Tuesday, targeting Tehran's ability to threaten commercial shipping in the Strait of Hormuz. Iran's Revolutionary Guard responded by hitting two oil tankers inside the strait and launching missile and drone strikes on U.S. military assets in Kuwait and Bahrain. President Trump said the U.S. would formally reinstate a blockade of Iranian shipping and begin charging a 20% transit fee on cargo moving through the strait, positioning the U.S. as what he called the waterway's 'guardian.' WTI crude rose 3% to $80.55 a barrel Tuesday and Brent jumped 4.3% to $86.85, extending Monday's surge; the Department of Energy said 8.5 million barrels of oil still moved through the strait Monday with military escort, consistent with the recent average. Citi warned Trump's transit-fee plan raises the risk of further escalation, including the possibility Iran abandons the ceasefire framework altogether, which would likely mean oil prices stay higher for longer.
Concept of the Day
Core Inflation vs. Headline Inflation
Headline inflation measures the total change in prices across everything consumers buy, including volatile categories like food and energy. Core inflation strips those two categories out, on the theory that a sudden jump or drop in oil prices — driven by, say, a geopolitical shock — doesn't tell you much about the underlying, persistent trend in prices across the rest of the economy. Central banks, including the Fed, focus on core inflation specifically because monetary policy works with long lags: raising or cutting interest rates today shows up in the economy over the following 12-18 months, so policymakers want a read on where prices are headed structurally, not where they happen to be this month because of a one-off supply shock. Today's June CPI report is a clean illustration of why the distinction matters. Headline CPI fell 0.4% for the month and its year-over-year rate dropped a full 0.7 percentage points to 3.5%, almost entirely because gasoline and energy prices fell sharply. That is a genuinely good headline number, but it's not really a signal that inflation pressure broadly eased — it's a signal that oil got cheaper for a month. Core CPI, which excludes energy, only eased marginally, from 2.9% to 2.6%, with shelter and services still running hot. That's the number that tells you whether the underlying inflation problem is actually being solved. This is exactly why the market's rate-hike expectations barely moved despite a headline beat that looked dramatic on the surface: traders and the Fed both know that a good headline print driven by energy can reverse just as fast as it appeared — especially with an active Iran conflict currently pushing oil back above $80 a barrel. A trader (or a Fed chair) who anchors decisions to headline inflation risks getting whipsawed by the next oil headline; anchoring to core is a more reliable, if less exciting, guide to where prices are actually headed.
Why it matters
With the Fed's next policy decision on July 28-29 — Warsh's first meeting as chair — the core/headline gap in today's data is the single most important input into how the committee frames its statement. A soft headline print gives doves ammunition to argue inflation is cooling, but sticky core inflation, especially with oil now climbing again on the Iran conflict, gives the more hawkish members of the committee (and Warsh himself, given his public commitment to 'get monetary policy right') reason to stay tight. For investors, the lesson is to build a mental model around core, not headline, when trying to anticipate the Fed's next move — and to recognize that today's good-looking inflation number could reverse quickly if the Hormuz standoff keeps pushing energy prices higher.
What to Watch
Wed, Jul 15
Producer Price Index (June)
PPI shows wholesale price pressure a day after CPI, an early cross-check on whether the energy-driven headline cooldown is showing up upstream too.
Wed, Jul 15
Fed Chair Kevin Warsh's Senate Banking Committee testimony
The second leg of Warsh's congressional debut, a day after his House appearance, is another chance to hear how he balances sticky core inflation against a hawkish FOMC.
Thu, Jul 16
Retail Sales (June)
Retail sales will show whether consumer spending is holding up even as oil and gas prices climb again on the Iran conflict.
Fri, Jul 17
University of Michigan Consumer Sentiment (July, preliminary)
This is the first look at how consumers feel in July, capturing any hit to confidence from the escalating Iran conflict and rising gas prices.
Tue, Jul 28
FOMC meeting begins (rate decision July 29)
This is the Fed's next policy decision and Warsh's first meeting running the committee, landing amid a live oil shock and a market still pricing meaningful hike odds.