US stocks exhibited divergent trajectories during Tuesday's midday session, with the Dow Jones Industrial Average briefly tumbling more than 300 points while the Nasdaq Composite climbed decisively. NVIDIA surged to unprecedented heights following US government assurances about partial AI chip export resumptions. June's CPI data revealed a 2.7% annual inflation increase as tariff impacts materialized, while investors digested major banking earnings releases.

The Dow retreated 258.00 points (0.58%) to 44,201.65, contrasting sharply with the Nasdaq's 138.25-point gain (0.67%) reaching 20,778.58. The S&P 500 remained virtually unchanged at 6,268.54. NVIDIA's record-setting rally came after the chipmaker confirmed imminent H20 AI chip shipments to China, stating: "The US government has assured NVIDIA that licenses will be granted."

Market participants scrutinized the nascent earnings season, anticipating robust Q2 reports to sustain record equity valuations. Major financial institutions reported mixed results: Wells Fargo exceeded profit expectations but trimmed net interest income guidance, while JPMorgan Chase outperformed forecasts through vigorous trading and investment banking revenue. Pre-season projections remained muted, with FactSet indicating expectations for modest 4.3% blended earnings growth across S&P 500 constituents.

Trade tensions intensified as President Trump threatened 30% tariffs on EU and Mexican imports effective August 1, exceeding April's proposed 20% EU levy. However, negotiation windows remain open, with Japan arranging high-level Friday talks and both EU and Korean officials engaging Washington. EU Trade Commissioner Maroš Šefčovič warned of retaliatory measures targeting €72 billion in US goods should talks collapse. Brazil meanwhile seeks tariff reductions from 50% to 30% with potential agricultural export quotas.

June inflation data signaled emerging tariff effects. Headline CPI rose 2.7% annually and 0.3% monthly, matching forecasts. Core CPI's 0.2% monthly increase fell short of the projected 0.3% gain, marking the fifth consecutive undershoot. Notable price accelerations surfaced in tariff-sensitive categories: recreational goods jumped 0.8%, household furnishings climbed 1.0%, and apparel increased 0.4%. Real weekly earnings grew 0.7% annually but contracted 0.4% monthly.

The core CPI miss amplified debates about tariff transmission mechanisms. Principal Global Strategist Seema Shah observed: "Tariffs are gradually permeating core goods prices, though full inflationary impacts may require months to materialize." CIBC's Katherine Judge noted: "Pre-tariff inventory stockpiles and corporate margin absorption currently buffer consumers, but diminishing reserves will eventually reveal true cost impacts." Market expectations now price inflation above 3% through mid-2026.

Corporate developments dominated trading: • NVIDIA soared on export license assurances • Tesla debuted its Mumbai showroom, targeting India's 430-vehicle market where EVs constitute just 2.5% of sales • Microsoft disclosed a 168% AI-driven energy consumption surge in its sustainability report • Apple committed $500 million to MP Materials for rare earth mining and magnet production • Google announced $25 billion for data center expansions and $3 billion for hydroelectric upgrades within PJM Interconnection's territory • Ericsson posted disappointing 6% quarterly sales decline • TSMC projected record 53% profit growth