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News of the day for July 15, 2026

Major indexes gained yesterday as chip stocks bounced back from a rough start to the week.
Credit: Michael Nagle / Bloomberg / Getty Images

Stock futures are pointing to a higher open as investors digest a flurry of earnings reports from major companies; oil prices are higher as the U.S. and Iran continue to trade strikes; PayPal shares are surging following a report that Stripe and Advent International have made a joint offer to buy the payments giant; ASML shares are gaining after the maker of chip manufacturing equipment reported strong results and lifted its sales forecast; and Morgan Stanley, Johnson & Johnson, Conagra and United are among the other big names reporting earnings today. Here’s what you need to know today.

Stock Futures Rise as Investors Digest Earnings Reports

Stock futures are slightly higher this morning as investors assess a barrage of earnings reports while also monitoring developments in the Middle East. Futures tied to the S&P 500 and the tech-heavy Nasdaq were up 0.1% and 0.4%, respectively, while Dow Jones Industrial Average Futures hovered near unchanged. The major indexes closed higher on Tuesday, as chip stocks rebounded after a a pullback to start the week, though the Dow’s gains were limited by a massive drop in shares of IBM (IBM). WTI crude oil futures were up nearly 1% recently at $80 per barrel, as the Iran war is driving the commodity higher again (more on that below). Gold futures were down roughly 1% at $4,035 an ounce, while bitcoin traded at 64,600, little-changed from yesterday afternoon’s levels. The yield on the 10-year Treasury yield was at 4.61%, up from 4.59% at Tuesday’s close.

Fighting in Iran Continues as U.S. Imposes New Blockade of Iran’s Ports

The U.S. and Iran are trading more strikes this morning as the U.S. continues to retaliate over Iran attacking several ships early this week that were passing through the Strait of Hormuz outside of the country’s preferred pathway closer to its shores. Iran’s Revolutionary Guard has threatened to halt energy exports from across the Middle East if the conflict continues, while President Trump has again threatened to attack civilian infrastructure including bridges and power plants. Back in the U.S., Senate Democrats on Tuesday blocked the passage of a $1 trillion defense bill that would have grown the Pentagon’s budget because of their opposition to the restarting of the war.

PayPal Stock Soars on Report of Potential $53 Billion Takeover Offer

PayPal Holdings (PYPL) shares are surging following a report that the payments platform could be in acquisition talks. Reuters reported late last night that payment processor Stripe and private equity firm Advent International have made an offer to acquire PayPal in a deal valuing the company at more than $53 billion. The offer would pay PayPal shareholders $60.50 per share, upside of nearly 30%. The talks started back in April, and Stripe and Advent are reportedly looking to advance negotiations soon, Reuters reported, noting that PayPal has not yet formally responded to the offer. PayPal shares were up nearly 20% in recent premarket trading, putting them on track to hit their highest level since January.

ASML Stock Gains on Solid Earnings, Sales Outlook

Shares of ASML Holding (ASML) are rising after the company reported results that topped estimates and lifted its sales outlook for the full year. The maker of semiconductor manufacturing equipment said Wednesday it earned 7.58 euros per share ($8.65) as revenue rose 20% to 9.33 billion euros ($10.65 billion), each beating what analysts had forecast. The Dutch company also lifted its full-year sales forecast to 43 billion to 45 billion euros, up from 36 billion to 40 billion previously, as CEO Christophe Fouquet said AI demand is leading many of ASML’s customers to invest in increasing their manufacturing capacity. ASML’s U.S.-listed shares were up 3% ahead of the opening bell.

Earnings Reporting Season Kicks Into High Gear

A number of other companies across various industries reported results this morning as the second-quarter earnings season rolls on. Following a group of big bank earnings that largely impressed yesterday, shares of BlackRock (BLK) and Morgan Stanley (MS) are each gaining today after the financial firms each topped estimates. Johnson & Johnson (JNJ) shares were down 2% recently despite a solid report that included a raised sales forecast from the pharmaceutical and medical device giant. Conagra Brands (CAG) stock fell 3% after the food maker roughly matched estimates in its quarterly report, its first since new CEO John Brase took over in June. United Airlines (UAL) is scheduled to release results after the closing bell today, following a solid report from Delta Air Lines (DAL) last week as the industry faces the threat of oil and jet fuel prices rising again. 

Despite the spike in prices since last year, home values are still rising slower than during the pandemic.
Credit: carlofranco / Getty Images

Key Takeaways

• U.S. home prices rose to nearly $409,000 in June, up 2.2% from last year.
• Higher-income buyers are driving demand and pushing prices higher, according to Redfin.

A new analysis of the housing market suggests homebuyers won’t be getting relief from high prices any time soon.

Home prices in the U.S. climbed to nearly $409,000 in June, an all-time high and up 2.2% from a year prior, according to a new Redfin report.

Steep year-over-year gains in a few metros helped lift the national figure: San Francisco led at 9.2%, followed by Pittsburgh at 9.1% and West Palm Beach, Fla., at 8.6%.

Prices also rose because 22% of homes sold above their original list price.

“High-end buyers are driving demand and prices in much of the country,” said Chen Zhao, Redfin’s head of economics research, in the report. “There’s a pool of higher-income buyers who are purchasing seven-figure homes.”

According to Freddie Mac data, the 30-year mortgage rate hovered around 6.5% in July. “A lot of first-time and average move-up buyers are priced out” with mortgage rates that high, Zhao said.

Rates are unlikely to fall much this year. Inflation has eased, falling to 3.5% year-over-year in June from 4.2% in May. Even so, investors aren’t anticipating rate cuts this year, according to CME Group’s FedWatch tool, which uses federal funds futures prices to gauge the Fed’s next move.

But there’s one bright spot for buyers: prices are climbing far more slowly than during the pandemic.

That’s when home prices rose at double-digit rates, according to Redfin. By contrast, the 2% year-over-year climb in home prices is relatively low, especially as it’s been outpaced by 3.5% wage growth over the past year.

Netflix shares have lost more than a fifth of their value so far this year
Credit: Lisa Lake / Getty Images for Netflix

Key Takeaways

• Netflix is due to release quarterly results after markets close Thursday, with a big move from the streamer’s stock expected to follow.
• Netflix is projected to report growing revenue and profits after raising prices for its plans earlier this year.

Netflix is set to report earnings after the closing bell later today, with the streaming giant’s stock seen potentially hitting its lowest point in nearly two years following the results.

Current options pricing suggests traders expect Netflix (NFLX) shares could swing up to 8% in either direction by the end of the week. A move of that magnitude from the stock’s recent level near $74 could see it slip below $68, which would be its lowest point since September 2024. The high end of that range could see shares rise above $79.

Netflix shares have lost more than a fifth of their value since the start of the year amid some worries about its user engagement and a weaker-than-expected revenue outlook. The Wall Street Journal reported last week that Netflix is considering adding live channels to boost engagement, and is also weighing bundling its service with other streamers to help grow subscriber numbers.

Why This Matters to Investors

A strong second-quarter report from Netflix could help improve sentiment around the streaming company’s stock, which has lost ground lately.

JPMorgan analysts recently wrote that investors could focus on updates around Netflix’s subscriber churn following a price hike earlier this year, along with investments in its content, and potential future acquisitions after the company dropped its bid for Warner Bros. Discovery (WBD).

Netflix is expected to report second-quarter revenue of $12.57 billion, up 13.5% year-over-year, along with earnings of 79 cents per share, up from 72 cents the same time a year ago.

Analysts have largely remained bullish on Netflix despite the stock’s pullback, with 10 of the 14 analysts tracked by Visible Alpha giving it a “buy” or equivalent rating, compared to four neutral ratings. Their mean target around $109 would suggest nearly 50% upside from the stock’s recent level.

This article has been updated since it was first published to reflect more recent prices.

Federal Reserve Chairman Kevin Warsh testifies before the House Financial Services Committee on Capitol Hill on July 14, 2026 in Washington, DC.
Credit: Eric Lee / Getty Images

Key Takeaways

• Federal Reserve Chair Kevin Warsh spoke to lawmakers Tuesday in the first of two scheduled appearances before Congress this week.
• Warsh said he’s determined to bring inflation down to a 2% annual rate for the first time since it surged out of control after the pandemic.
• Warsh said the Fed needed to undertake major reforms to improve its ability to carry out its dual mandate to keep inflation low and employment high.

Federal Reserve Chair Kevin Warsh made his first appearance before Congress Tuesday, breaking new ground and doubling down on his recent tough talk about inflation and the central bank’s independence from political interference.

Warsh took questions from members of the House Financial Services Committee as part of his twice-yearly appearance before Congress. Warsh used the opportunity to restate his determination to bring inflation down to the Fed’s 2% annual goal, discuss his plans to reform the Fed and promote an optimistic view of the impact of AI on the economy.

As expected, and in keeping with his dislike of offering “forward guidance,” he did not give any hints about whether the Fed plans to raise interest rates to combat high inflation, or when such rate hikes would likely come.

What This Means For The Economy

The trajectory of the economy could depend on whether Warsh is able to follow through on his commitment to bring inflation down to 2%, and whether the Fed raises its benchmark interest rate in the coming months to achieve that objective.

Here are five takeaways from his testimony.

Warsh Wants To Push Down Inflation

In Warsh’s few public appearances and statements so far, he has forcefully stated the Fed’s determination to get inflation under control. Tuesday’s appearance was no different. Warsh noted that inflation has not been at the Fed’s 2% annual target since 2021, something he said he wants to change.

“If we get policy right—and we will—the inflation surge of the last five years will be a thing of the past,” Warsh said.

‘Regime Change’ Is Coming To The Fed

Warsh said he believes the Fed needs to change how it operates to achieve the 2% objective. To that end, Warsh has appointed five task forces to reexamine key aspects of the Fed’s operations, potentially leading to big changes in how the Fed works.

“The 63 months of inflation above target has been an unfair burden and has been a tax on the American people and businesses,” Warsh said. “We plan on getting rid of that. That means we need a regime change in policy and we need new consideration of practices, some of which have been working, some of which haven’t. That’s what we aim to do, and we’re just getting started.”

Warsh offered few new details about the task forces, whose members he announced last week.

Inflation Is Still Too High Despite Report Tuesday Showing Progress

Although Warsh kept quiet about any potential rate hike plans, he offered an assessment of Tuesday’s Consumer Price Index report, which showed inflation was lower than expected in June. Warsh said the deceleration of inflation was welcome news but didn’t mean the Fed’s job was done.

“I reviewed the data that came out this morning on CPI and it was positive relative to expectations,” Warsh said. “I am not going to show up here and say, ‘Mission accomplished.’ I would say there’s plenty of work to do.”

Warsh Promised To Resist Pressure From President Trump

Warsh gave his most explicit statements yet that he would resist pressure from President Donald Trump to cut interest rates.

“My commitment to you is to follow the law and follow the data. Follow our very best judgment,” Warsh said in response to a question about resisting Trump’s influence.

Trump has repeatedly said the Fed should sharply lower the fed funds rate, which would push down borrowing costs on all kinds of loans and reduce the interest the government pays on the national debt. However, Fed officials have instead kept it higher for longer and even discussed raising it further, since the fed funds rate is the central bank’s main tool for fighting inflation.

The disagreement over interest rate policy has been the main flashpoint of the conflict between Trump and the Fed over the past year.

Congress established the Fed to be outside direct control of the White House, with any given president having too few opportunities to appoint officials at the Fed to effectively take control of it. Economists say that independence is important for the Fed’s credibility and its ability to keep inflation in check.

Warsh Doesn’t Favor ‘Trimmed Mean’ Inflation Over Other Measures

One round of questioning shed light on a fundamental question Warsh is grappling with: how should the Fed measure inflation?

In the past, Warsh has been critical of the Fed’s preferred measure of inflation, the core measure of the Personal Consumer Expenditure’s price index. At his confirmation hearings, Warsh said he prefers to use a “trimmed average” of prices instead.

But on Tuesday, he said that it doesn’t necessarily have to be the go-to measure for the Fed’s policy committee.

“None of those are very good measures of underlying inflation. If I had a preferred measure, I wouldn’t have called for a task force,” Warsh said. “I am super interested in finding new measures to do a better job to help us inform our decisions so that the inflation of the last five years doesn’t continue.”

Correction—July 15, 2026. Corrects Warsh’s name in third-to-last paragraph. This article was originally published July 14, 2026.

Data center owner and operator Csquare is the next AI IPO on tap.
Credit: Photo by TIMOTHY A. CLARY / AFP via Getty Images

Key Takeaways

• Another AI IPO is expected soon: Csquare, the owner and operator of 64 data center sites, is set to list on the NYSE soon under the ticker “CSQR.”
• Csquare intends to use about 75% of its IPO net proceeds to pay its debts, according to company filings.

The artificial intelligence trade continues to widen.

Some of the biggest names—companies like OpenAI and Anthropic—aren’t public yet. But others are here or on the way: Companies from Cerebras (CBRS) to SpaceX (SPCX) have listed on U.S. exchanges as investors clamor for companies charting the next frontier in technology, whether it means making chips or pitching space-based data centers. The demand for them is sufficient that companies based elsewhere are tapping capital markets in the U.S.: Take South Korean memory chip maker SK Hynix (SKHY), for example.

Brookfield-backed (BN) data center owner Csquare, expected to list on the NYSE under the symbol “CSQR” as soon as this week, will serve as a litmus test for the next round of companies that, in the wake of SpaceX’s hot-then-cold reception, are wondering whether to move forward with or postpone their debuts at a time when some investors are less devoted to the AI trade than they were in recent months.

The Coppell, Texas-headquartered firm owns and operates 64 data center sites in 21 cities with a sellable capacity of more than 380 megawatts. (Large, or “hyperscale,” data centers have about 100 megawatts of capacity, according to the IEA.)  It generated $270.5 million in revenue for the March quarter and logged a net loss of $65.9 million, according to the company’s IPO filing. “Leading hyperscalers,” Csquare said, accounted for roughly 11% of its monthly recurring revenue as of March.

The company plans to use roughly 75% of its IPO net proceeds to pay its debts, the company said. As of June 30, its debt and finance leases were roughly $5.4 billion, according to the company filing.

Post-IPO, Brookfield would own 67% of the Csquare common stock, excluding the underwriters’ option to sell more shares than originally planned.

Share of Apple hit a record high on Monday.
Credit: Cheng Xin / Getty Images

Key Takeaways

• KeyBanc analysts downgraded Apple’s stock to “underperform” Tuesday, telling clients expectations for the iPhone maker could be “too aggressive.”
• The move stands out on Wall Street, with most analysts surveyed by Visible Alpha still bullish Apple has room to rise after hitting a record high this week.

After Apple’s recent runup, one Wall Street expert is saying it’s time to step on the brakes.

Shares of Apple (AAPL)—which were down less than 1% around $315 in late trading Tuesday after hitting a record high yesterday—have surged 9% since the month began amid growing anticipation of new product launches and progress under new CEO John Ternus, who’s set to take over the top role from Tim Cook in September.

That could leave Apple’s stock due for a pullback, according to analysts at KeyBanc, who downgraded Apple’s stock to “underperform” Tuesday and told clients they believe expectations may have become “too aggressive.”

Why This Is Significant

KeyBanc’s downgrade could throw a wrench in recent enthusiasm for shares of Apple after their record rally.

“We see U.S. carriers pulling back on device subsidies, slowing upgrade rates, and International likely needing to carry more weight, which gets difficult in a rising price environment,” said KeyBanc. Apple raised prices on several products last month to offset high memory costs, with the company seen extending its price hikes to iPhones later this year.

KeyBanc’s bearish stance stands stands out on Wall Street, however. Its price target at $250 is well below the mean of analysts tracked by Visible Alpha around $330. Five of the eight analysts with current ratings recommend buying the stock, compared to one neutral and two sell ratings.

With its recent gains, shares of Apple are up 16% year-to-date, making it the best-performing Magnificent 7 stock of 2026 so far.

IBM stock tumbled on Tuesday after its preliminary second-quarter results missed estimates.
Credit: Sean Gallup / Getty Images

Key Takeaways

• Software stocks slid and AI hardware plays rose Tuesday after IBM attributed disappointing preliminary results to execution issues and customers prioritizing spending on servers, storage, and memory over other tech products and services.
• IBM’s warning about aggressive “capex reprioritization” adds to the pressure on software stocks, which have been hammered this year by concern that AI coding agents will nullify legacy software’s competitive advantage.

IBM says the AI-driven memory shortage is dinging its sales. That’s bad for the stock—and it’s pulling software shares downward.

“Big blue” earlier today in a preliminary earnings report said revenue increased 1% to $17.2 billion in the second quarter, well below the 5% target the company has set for full-year growth. Software revenue growth decelerated to 5% from 11% in the prior quarter, and infrastructure revenue declined 7% after increasing 15% in Q1. IBM (IBM) CEO Arvind Krishna said the disappointing software and infrastructure performance was “driven by a shortfall in our Z performance and the associated software stack”—Z is the company’s name for its mainframe systems—and the company’s failure to adapt to market conditions, but he noted the memory shortage played a part, too.

“In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases,” Krishna wrote. The company had anticipated some supply chain challenges, but “we did not anticipate the magnitude of the capex reprioritization,” he added.

Why This Matters

Tech investors have been debating the likelihood that AI empowers non-software companies to build their own custom tools rather than shell out for existing software that isn’t purpose-built. The industry’s headwinds grew stronger on Tuesday when IBM suggested the AI-fueled memory shortage is causing a greater share of IT budgets to be spent on hardware.

IBM’s update adds to the software industry’s AI headwinds. Shares slumped earlier this year as investors debated whether increasingly capable AI coding agents would upend the high-margin software business. Those fears were amplified last week by a report that Starbucks is using AI to develop in-house tools to replace inventory and maintenance management software supplied by Microsoft and IBM.

IBM shares plummeted 25% on Tuesday, leading a sell-off in software and tech services stocks. ServiceNow (NOW) and Adobe (ADBE) slid 6% and 4%, respectively, while Microsoft (MSFT) stock shed 1.5%. Meanwhile, shares of server, storage, and memory device makers rallied after yesterday’s slump. Shares of server makers Dell (DELL) and Hewlett Packard Enterprise (HPE) jumped 7% and 5%, respectively. Sandisk (SNDK) and Micron (MU) advanced about 5% each. 

Booming demand from AI data centers has caused a shortage of memory and data storage devices being felt across the tech sector. Chipmakers and analysts have warned since last year that soaring memory costs could pressure profits at tech hardware makers like Intel (INTC) and Dell. Apple (AAPL) last month raised prices on some products to offset higher costs. Memory suppliers like Micron and Sandisk have seen their sales and profits balloon in the past year, fueling big gains for their stocks. 

Tuesday’s IBM update may force a reset of investor expectations heading into a highly anticipated round of earnings reports seen as vital to inspiring more confidence in stocks. Analysts at Bank of America and Oppenheimer had recently predicted IBM would raise its full-year revenue forecast after reporting unsurprising second-quarter results. Goldman Sachs analysts forecast “modest upside” for the quarter “with software momentum likely intact.”  

“Checks show no surprises in business trajectory,” Oppenheimer analysts titled their IBM earnings preview published shortly before the company’s preliminary results surprised Wall Street. (IBM is slated to report official quarterly results after markets close on July 22.)

The big question now: how much to read into today’s news. JPMorgan analysts in a note Tuesday suggested investors may be jumping the gun if they lower the bar for software earnings based on IBM’s results. The analysts warned against extrapolating IBM’s revenue headwinds, which stem from “customer spend on Mainframes and associated software,” not its entire software business, which includes cloud, automation, and data management tools. While JPMorgan analysts expect the capex prioritization highlighted by IBM will preclude big software earnings beats in the coming weeks, their recent check-ins with companies suggest “the headwinds do not appear to be broad-based.” 

Update—July 14, 2026: This article was updated after initial publication with stock performance data as of Tuesday’s market close.

Several CEOs Cited Economic Strength as Major Banks Reported Earnings

JPMorgan Chase CEO Jamie Dimon on Tuesday told investors to watch for risks to the U.S. economy.
Credit: Qilai Shen / Bloomberg via Getty Images

Key Takeaways

• A slew of leading banks reported their latest quarterly results today, with several of their executives sharing economic commentary along with their numbers.

• JPMorgan Chase’s Jamie Dimon, for one, said the U.S. economy remained resilient, though not without possible headwinds.

A swirling mix of forces could force “meaningful disruptions” to the U.S. economy, according to JPMorgan Chase CEO Jamie Dimon.

Dimon, in a Tuesday statement that accompanied his bank’s latest quarterly financial results, said the economy remained “resilient” while faced with risks that are “swirling before the surface.” His latest statements extend a theme on which Dimon has commented for months; in April, for example, the JPMorgan chief (JPM) cited “an increasingly complex set of risks.”

“The U.S. economy has demonstrated notable resiliency this year, with stronger business investment and hiring,” Dimon said in Tuesday’s release. “This strength is being supported by several tailwinds, including AI-driven capital investment, fiscal stimulus and the benefits of more efficient regulation. However, several risks are shifting below the surface like tectonic plates, including geopolitical tensions and wars, sticky inflation, large global fiscal deficits and elevated asset prices.”

Why This Matters to You

Investors tend to listen closely to the commentary of big bank executives on the state of the economy. Today executives’ commentary indicated sustained optimism, though with some caveats that suggested that investors will remain vigilant.

Those forces, Dimon said, “may remain manageable, but they could also cause meaningful disruptions when they shift or collide.”

Bank of America (BAC) CEO Brian Moynihan in his bank’s latest financial release cited a “healthy economic backdrop” and “resilient consumers and businesses.” Wells Fargo’s (WFC) Charlie Scharf observed “broad-based economic strength,” saying that “concerns around affordability and inflation exist, but the labor market and wage growth remain strong.”

The executives’ comments come as investors are digesting not only earnings from major U.S. banks, effectively the start of the second-quarter quarterly reporting season, but a fresh inflation reading. Bank results—JPMorgan said each of its business lines posted record quarterly revenue—were broadly cheered, with the KBW Nasdaq Bank Index, or BKX, outperforming the S&P 500 on Tuesday morning. (Read Investopedia’s full coverage of today’s trading here.)

The consumer price data released this morning showed that inflation moderated last month as gas prices fell. Cooler inflation could mean less pressure on the Federal Reserve to raise interest rates, though renewed fighting in the Middle East could push fuel prices higher again. New Fed Chair Kevin Warsh is addressing Congress today and tomorrow, while a monthly federal report on retail sales is due Thursday. Job growth was muted in June, though the unemployment rate ticked lower.

“We know that such favorable conditions do not go on forever so we are being selective about how much and where to grow,” said Scharf.

IBM shares lost one-quarter of their value Tuesday
Credit: Michael Nguyen / NurPhoto / Getty Images

Key Takeaways

• IBM shares tumbled Tuesday after the software giant posted preliminary results for the second quarter that disappointed.
• IBM CEO Arvind Krishna said some of IBM’s customers are pulling back as memory chips and server prices soar.

IBM stock is getting hammered and dragging other software stocks down with it after the tech giant warned clients are pulling back spending.

Shares of International Business Machines (IBM) plunged 25% Tuesday after CEO Arvind Krishna blamed a weakening software environment for disappointing preliminary results. The move single-handedly shaved over 400 points off the Dow Jones Industrial Average. Other software stocks also slid, with Salesforce (CRM), Adobe (ADBE), Intuit (INTU), and ServiceNow (NOW) each losing between 2% to 6%. (For more reporting from Investopedia on today’s market moves, click here.)

Krishna said in a letter to investors that the tech giant “faltered” in the second quarter as some of IBM’s customers cut back on software to focus spending on servers and memory products which have seen prices soar in recent months.

Why This Matters to Investors

IBM’s warning could be taken as a discouraging sign for other software providers ahead of their earnings.

IBM said Tuesday that it expects second-quarter revenue to come in at $17.2 billion, up 1% year-over-year but below the $17.8 billion analysts had been expecting, per Visible Alpha estimates. IBM said it will likely report earnings per share of $2.27, well below the $2.60 analysts called for, while adjusted EPS is seen coming in at $2.93, closer to the $2.98 analyst consensus.

Investors will get the chance to hear more from IBM executives on the lackluster second-quarter performance and IBM’s outlook for the rest of the year when the company reports its quarterly results after the closing bell next Wednesday.

With Tuesday’s slump, IBM shares have lost 27% their value since the start of the year, pulling back sharply from their record high at the start of June.

This article has been updated since it was first published to reflect more recent prices and include the impact of IBM’s stock move on the Dow Jones Industrial Average.

A customer washes their windshield near gas prices displayed at a gas station on July 7, 2026, in Pasadena, California.
Credit: Mario Tama / Getty Images

Key Takeaways

• Consumer prices rose 3.5% over 12 months in June, far less than forecasters’ expectations.
• Falling energy prices, the result of a peace deal between the U.S. and Iran, helped push down inflation, but renewed hostilities have since pushed prices up again.
• Lower gas prices may have delayed the need for the Federal Reserve to raise its benchmark interest rate to counteract inflation.

A drop in gasoline prices in June gave consumers a significant, albeit likely short-lived, breather from high inflation.

The Consumer Price Index fell 0.4% in June, the largest single-month drop since the onset of COVID-19 in April 2020, the Bureau of Labor Statistics said Tuesday. The decrease, mainly due to a 9.7% drop in gasoline prices, led to a 3.5% year-over-year increase in the index, down from a 4.2% annual increase in May.

The yearly number was below the 3.8% forecasters had anticipated, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. The core price index, which excludes volatile food and energy prices, stayed flat compared to May and was up 2.6% over 12 months, also lower than the 2.9% median forecast.

What This Means For The Economy

Lower-than-expected inflation helps the economy in several ways: it gives consumers more spending power and reduces the likelihood that the Federal Reserve will be forced to raise interest rates to curb inflation.

The unexpectedly cool inflation in June took some pressure off household budgets, which have been squeezed by price increases that have persistently overshot the Fed’s 2% target since 2021. However, the relief may not last: the dip in gasoline prices was due to a truce in the Iran war that collapsed this week. The fighting once again disrupted energy supplies from the Middle East, causing prices of crude oil and gasoline to rise sharply.

Energy prices have swung wildly amid developments in the war, depending on whether oil tankers can transit the crucial Strait of Hormuz between Iran and Oman. The strait facilitated the transport of 20% of the world’s oil supply in February before the war began.

Even so, the overall tame report may have given some breathing room for the Federal Reserve to delay raising the central bank’s key interest rate.

On Monday, financial markets were pricing in a nearly 42% chance the Federal Open Market Committee would raise rates at its next meeting later this month in a bid to force down inflation, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data. Those rate hike odds plunged Tuesday to just 13% in the wake of the report, although a rate hike is still broadly expected by the end of the year.

“The well-behaved CPI print likely lowers pressure on the Fed to hike soon, but the reignition of hostilities in Iran means the prospect of hikes is far from over,” Kay Haigh, global head of fixed Income and liquidity solutions at Goldman Sachs Asset Management, wrote in a commentary. “Concerns over energy supply through the Strait of Hormuz raises risks to the forward-looking inflation outlook, which could force the FOMC’s hand eventually.”

When assessing the inflation trajectory, Fed officials prefer to look at core prices, since food and gas prices can fluctuate for reasons unrelated to longer-term inflation trends. The deceleration of core inflation in June was a sign that inflation could be losing steam over the long run if and when the war in Iran and its energy disruptions come to an end.

Prices for used cars, clothes, and medical products were among those that fell outright during the month. Core goods prices, the category most affected by import taxes, fell 0.1%, dropping for a second month in a row, suggesting that consumers are getting price breaks because of the Supreme Court striking down most of President Donald Trump’s tariffs earlier this year.

In particular, the drop in clothing and household furnishings “hints that retailers are passing on tariff savings to consumers,” Samuel Tombs, Chief U.S. economist at Pantheon Macroeconomics, wrote in a commentary.

The report may also have allayed fears that high gasoline prices could push up core inflation as higher transportation costs get passed down through the supply chain.

“The Federal Reserve is worried about a broadening out of inflationary pressures across goods and services, and that wasn’t evident in the June CPI details,” Bernard Yaros, lead U.S. economist at Oxford Economics, wrote in a commentary.

Update, July 14, 2026—This story has been updated after publication with additional details on inflation and commentary from economists. It was first published on July 14, 2026.