Stocks rise as US inflation cools, ASML beats forecasts

Stocks rallied after U.S. inflation fell 0.4% in June, the biggest one-month drop since April 2020, and ASML raised its outlook after a stronger-than-expected quarter. The softer consumer-price reading helped steady bonds and pushed Nasdaq futures up 0.8%, while South Korea’s KOSPI jumped 6% and Japan’s Nikkei rose 1%.

The market move was a bet that the Federal Reserve has less reason to keep hiking rates, or even to prepare for another increase in the near term. J.P. Morgan analysts said the inflation report was better than a Goldilocks scenario and could remove fears of a July rate hike, while Fed Chair Kevin Warsh told Congress that one data point was not enough to declare victory over inflation. The June figures still showed inflation running at 3.5% over the past 12 months, down from 4.2% in May, with core CPI flat on the month and up 2.6% from a year earlier. That is enough to lift equity sentiment, but not enough to declare price pressure over.

The clearest relief came from energy. The U.S. Bureau of Labor Statistics said energy prices fell 5.7% in June and were the main driver of the monthly decline. For households, that matters most at the gas pump and in utility bills. But the broader picture was less comforting: core prices did not fall at all on the month, and annual inflation remained well above the Federal Reserve’s 2% target. The rally on Wall Street is therefore betting on cheaper borrowing ahead, from mortgages and corporate loans to credit cards, while Main Street is still living with a level of inflation that has not been fully squeezed out of the economy.

ASML added another lift to the session. The Dutch chip-equipment maker said second-quarter net sales were €9.3 billion, gross margin was 54.0% and net income was €2.9 billion, all above guidance. It raised full-year 2026 revenue guidance to €43 billion to €45 billion and gross margin guidance to 54% to 56%, and said third-quarter net sales should land between €11.0 billion and €12.0 billion. ASML also said it planned to add 30% to its 2026 low-NA EUV capacity for 2027 and was studying another 30% increase for 2028, a sign that AI-related chip demand is still pulling through the supply chain even as some big tech names wobble.

That split was visible elsewhere in the market. IBM fell 25% after its revenue forecast missed expectations, showing how fragile the AI trade has become, even as strong quarterly profits from JPMorgan Chase, Goldman Sachs, Bank of America and Citigroup continued to support equities. Oil also stayed in focus after tensions around the Strait of Hormuz kept U.S. crude near $79.34 a barrel and Brent at $84.73, while China’s second-quarter growth slowed to 4.3%, adding to the uneven global backdrop.