Good morning! A surprisingly good result for June's inflation report buoyed markets, pushing the S&P 500 (^GSPC) up 0.3%, the Nasdaq (^IXIC) 0.9%, and the Dow (^DJI) up 0.02%.

What we're watching Wednesday: The Producer Price Index will follow Tuesday's consumer version, hopefully backing up the solid CPI data. We'll also be watching for the Fed's Beige Book of regional anecdata, and Johnson & Johnson (JNJ), Morgan Stanley (MS), BlackRock (BLK), United Airlines Holdings (UAL), and many more report their quarters.

Yahoo Finance Morning Brief is written by Ethan Wolff-Mann.

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School supplies are displayed for sale on shelves at a Target store on June 22, 2026 in Cedar Park, Texas. Retail giants including Walmart, Target, Amazon, and Office Depot have launched their back-to-school sales earlier than usual this year as shoppers search for bargains amid persistent inflation and rising household expenses. (Photo by Brandon Bell/Getty Images)

June's inflation data surprised the market by showing better-than-expected results. Markets had expected prices to grow by -0.1% — a decline.

Inflation good news has mostly been deceleration, i.e., prices didn't grow as much or price growth slowed. But in those cases, prices still went up nonetheless.

But this data showed prices actually fell 0.4%, the biggest decrease since April 2020, when we saw a 0.8% decrease. Annual inflation dropped to 3.5%.

Gas prices had a big thumb on this scale, as the core figure (no energy, no food) shows: flat price growth and an annual figure that dropped to 2.6%. But these numbers were good enough to dramatically reduce the likelihood of a rate hike from the Fed.

In response, Treasurys surged, pushing the 10-year yield down below 4.6% (though that's still high) and recalibrating the rate-hike outlook.

According to the CME's FedWatch tool, the chances of a July meeting rate hike fell from 42% to under 20%.

(Spencer Platt/Getty Images)

The banks have spoken. And as JPMorgan CEO Jamie Dimon quipped, "It's getting close to as good as it gets," thanks to massive profits from trading and dealmaking that led to the bank's biggest quarterly profit on record.

The whole cohort did well, and as Goldman Sachs CEO David Solomon put it, "momentum has accelerated throughout our businesses."

Perhaps most importantly, he added, "given what we see in our pipelines, we expect this flywheel of activity to continue."

Huge corporate results and strong outlooks make for a bullish start to this earnings season as a high bar has been cleared.

But as much as the sector's results are a general harbinger for corporate America, the first dose of earnings season saw marked confidence about the consumer economy. As our quote of the day illustrates, the resilient consumer narrative is very much alive.

As Semafor CEO Justin Smith demonstrates, AI-focused devices are subtle enough to not notice — unless you're looking for them. (Tasos Katopodis/Getty)

We're still thinking about Apple's lawsuit against OpenAI and what it means for Big Tech.

While OpenAI's trial versus Elon Musk might have been a big deal for the company casting aside an existential risk, this current legal imbroglio illustrates something more industry-wide: the importance of AI devices.

What becomes the next big device couldn't be less clear. It could still be a phone, a market which Apple firmly controls. But the company's aggressive defense of its trade secrets — allegedly stolen — show just how big the stakes are if OpenAI launches a device and vertically integrates hardware and its ChatGPT platform.

Veteran analyst Gene Munster noted that lawsuits are normal, as is continuous litigation. But this is something more.

"In my perspective, the fact that Apple is going this hard after Tan underscores more than retaliation," he wrote in a note. "It signals a belief that Apple sees a future where it's important for the iPhone to leverage new AI devices."

As both experts and the popularity of Meta's glasses indicate, the next hardware is probably camera-based. 

REUTERS/Romina Amato

Preannouncing earnings results is the financial equivalent of sending a "don't be mad" text or asking someone if they're "sitting down."

IBM's announcement was way below Wall Street's expectations, as the AI trade took an enormous bite out of its businesses in two different, unique ways. The stock fell 25%.

Companies' changing business needs played a role, as IBM's software and mainframe business sees AI competition. But this earnings disaster may have been hit by a knock-on effect of AI's chip-hungry behavior: Clients have completely changed their buying plans amid the global memory shortage.

"In the last few weeks of June, we saw clients shift their quarterly [capital expenditures] spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases," IBM CEO Arvind Krishna said.

This signaled spending shift lit a fire under a few other stocks, like CrowdStrike, which surged.

The company will do its quarterly call on July 22 for more details.