U.S. equities closed mixed on Tuesday with the Dow Jones Industrial Average tumbling more than 400 points while the Nasdaq Composite reached unprecedented heights. Market participants parsed through corporate earnings and inflation data as Nvidia hit historic highs following U.S. government assurances about partial AI chip exports. June CPI rose 2.7% year-over-year, signaling emerging tariff impacts.

The Dow plunged 436.36 points (0.98%) to 44,023.29. Conversely, the Nasdaq climbed 37.47 points (0.18%) to 20,677.80. The S&P 500 retreated 24.80 points (0.40%) to 6,243.76 after earlier touching an intraday peak of 6,302.04. The Nasdaq similarly achieved a session high of 20,836.04.

Nvidia soared to record levels after confirming plans to "shortly" resume H20 AI chip sales to China. "The U.S. government has assured Nvidia that licenses will be granted," the chipmaker stated, adding it "expects to commence deliveries promptly."

Investors scrutinized the nascent earnings season, anticipating robust Q2 reports might sustain equities near record valuations. Major banks reported Tuesday morning: Wells Fargo exceeded profit expectations but trimmed net interest income guidance, while JPMorgan Chase surpassed forecasts fueled by robust trading and investment banking revenue. Pre-season estimates projected 4.3% blended year-over-year earnings growth for S&P 500 constituents according to FactSet.

"President Trump's renewed tariff discussions suggest actual rates could exceed current expectations," noted Dan Greenhaus, Solus Alternative Asset Management chief strategist. "After a historic rally, consolidation appears warranted until clarity emerges."

Trade developments dominated headlines as President Trump announced a tariff agreement with Indonesia imposing 19% duties on Indonesian imports while exempting U.S. exports. "They pay 19%, we pay nothing," Trump declared, claiming "full access to Indonesia's market." Previously threatened with 32% tariffs, Indonesia became the first nation to negotiate lower rates following Trump's tariff letters. Indonesia's coordinating economic ministry confirmed preparations for a joint statement detailing non-tariff measures and commercial accords.

Trump separately threatened 30% tariffs on EU and Mexico effective August 1, exceeding April's proposed 20% EU rate. However, Monday's remarks about ongoing negotiations bolstered expectations for potential rate reductions. Japan reportedly seeks high-level U.S. talks this Friday, while the EU and Mexico continue discussions. EU Trade Commissioner Maros Sefcovic warned of €72 billion counter-tariffs should negotiations fail. Brazil may seek tariff reductions from 50% to 30% alongside possible implementation delays and coffee/orange export quotas.

June CPI showed inflation reaccelerating with the consumer price index rising 2.7% annually and 0.3% monthly, matching projections. Core CPI (excluding food/energy) increased 0.2% monthly versus 0.3% estimates, marking the fifth consecutive below-forecast reading. Notably, tariff-sensitive categories exhibited price surges: entertainment products rose 0.8% (versus 0.4% in prior months), household goods jumped 1%, and apparel gained 0.4% following two months of declines.

The core CPI miss potentially complicates Federal Reserve policy decisions. While tariff impacts manifested strongly in toys, furniture, and apparel, falling auto prices constrained overall inflation. Some businesses shielded consumers through pre-tariff inventory stockpiling or margin compression. BMO Capital Markets' Ian Lyngen observed, "This CPI report seems unlikely to catalyze Fed cuts before September given tariff uncertainty." Treasury yields showed muted reaction post-release.

Principal Global Strategist Seema Shah noted tariff effects "seep into core goods prices," though full impacts may require months to materialize. CIBC's Katherine Judge added, "Tariff pass-through remains moderate as inventories accumulated pre-tariff buffer consumers, but depletion could amplify effects." Market pricing indicates persistent inflation above 3% for the next year before moderating by mid-2026.

President Trump will unveil a $70 billion artificial intelligence and energy investment initiative in Pennsylvania on Tuesday. The plan encompasses data center construction, power infrastructure upgrades, and AI workforce development programs supported by private enterprises.

Corporate Highlights: - Nvidia reached record highs after U.S. export license assurances - Tesla launched its first Indian showroom despite market challenges (2.5% EV penetration; sub-$20k average price) - Microsoft's sustainability report revealed 168% energy consumption surge and 23.4% carbon increase from AI expansion - Apple secured a $500 million rare earth supply deal with Pentagon-backed MP Materials, establishing U.S. magnet production - Google committed $2.5 billion to bolster PJM Interconnection grid capacity for AI/data centers - AMD may resume MI308 chip exports pending U.S. approval - Ericsson reported 6% quarterly sales decline missing estimates - Analysts project TSMC's 53% quarterly profit surge to record levels