U.S. equities finished mixed Tuesday as a stunning collapse in IBM shares dragged on the Dow while a cooler-than-expected inflation print and blockbuster bank earnings gave the Nasdaq the upper hand. The S&P 500 slipped 0.22%, the Dow Jones Industrial Average fell 0.34%, and the Nasdaq Composite added 0.44%, according to session data compiled by Yahoo Finance and TheStreet.
IBM's Worst Day Since 1987
IBM shares cratered roughly 25% after the company preannounced disappointing Q2 results, with adjusted earnings per share of $2.93 on revenue of $17.2 billion — well short of the $3.02 EPS and $17.86 billion in revenue that analysts had modeled, according to CNBC and Yahoo Finance. It was IBM's steepest single-day decline dating back to 1961, eclipsing the 23% drop the stock suffered in October 1987.
CEO Arvind Krishna said enterprise clients are diverting capital away from software and mainframe products and toward AI servers, storage, and memory. "Businesses racing to secure access to supply-constrained servers, chips and networking gear are diverting spending away from other technologies," Reuters reported, characterizing the warning as fresh evidence that the AI infrastructure buildout is squeezing traditional software budgets.
The read-through hit the broader software complex. Salesforce, Adobe, and Intuit all traded lower on concerns that the same AI-driven capex reallocation could weigh on their outlooks. On the flip side, memory names benefited: SK Hynix and Micron jumped as investors doubled down on the pick-and-shovel trade.
Banks Deliver — JPMorgan Tops the Tape
The morning belonged to the big banks, which reported alongside the CPI release in what TechTimes dubbed a "rare double print." JPMorgan Chase led the pack, posting adjusted EPS of $6.14 versus the LSEG consensus of $5.85, with revenue of $58.02 billion crushing the $50.19 billion Street estimate.
Investment banking and trading desks were the standout drivers. KBW's Chris McGratty had forecast investment banking revenue up 26% year over year and trading revenue up 14%, and Tuesday's prints validated that call. CNBC highlighted a windfall from the recent SpaceX IPO, which drove surging advisory and debt-raising fees for Goldman Sachs and Morgan Stanley — plus "soft dollar" flows from hedge funds on the oversubscribed deal.
Wells Fargo also topped estimates, while Bank of America, Citigroup, and Goldman Sachs commentary focused investors on consumer credit trends and loan-loss provisioning heading into the second half.
Cooler CPI Adds a Tailwind
The macro backdrop turned friendlier before the opening bell. June headline CPI rose 3.5% year over year, below the 3.8% consensus, while month-over-month prices fell 0.4% — a sharper drop than economists had penciled in. Treasury yields eased on the release, giving duration-sensitive tech names an added lift and reinforcing the bid under semiconductors.
The softer inflation read landed against a corporate tape that was suddenly bifurcated: AI-infrastructure winners on one side, legacy software incumbents on the other. For traders, IBM's warning framed the risk of a K-shaped tech tape, where hyperscaler capex fuels a narrow group of hardware beneficiaries even as software budgets face real compression.
What to Watch
Attention now turns to the remaining bank prints and to guidance from software peers reporting later this earnings season. Any confirmation that AI spending is cannibalizing traditional IT budgets — rather than expanding the pie — would validate the day's rotation and put continued pressure on the software complex.
Sources: Yahoo Finance (IBM 25% plunge coverage; market close recap), CNBC (IBM 23% drop coverage; bank earnings live blog), The Motley Fool (IBM Slides After Profit Warning Weighs on Dow), Reuters via MarketScreener (IBM AI software budget warning), TheStreet (Stock Market Today July 14, 2026), TechTimes (Wall Street Q2 Bank Earnings and June CPI preview).