US close: Stocks end session lower as Q2 earnings begin to roll in

Wall Street stocks closed lower on Tuesday as a key inflation report from the Department of Labor revealed that the cost of living in the US had jumped ahead of forecasts in June.

At the close, the Dow Jones Industrial Average was down 0.31% at 34,888.79, while the S&P 500 was 0.35% stronger at 4,369.21 and the Nasdaq Composite saw out the session 0.38% higher at 14,677.65.

The Dow closed 107.39 points lower on Tuesday, with the session's principal focus being on news that the cost of living in the US had jumped past forecasts in June, driven higher by big increases in the cost of energy, food and vehicles. According to the Department of Labor, in seasonally adjusted terms, the country's consumer price index bounded ahead at a month-on-month pace of 0.9%, which pushed the annual rate of change up to 5.4%. Economists had anticipated that the latter would remain at May's level of 4.5%.

Core CPI also exceeded forecasts by a wide margin, increasing by 0.9% versus May which pushed the year-on-year rate of increase to 4.5%, ahead of consensus estimates for a print of 4.1%.

Tuesday's other primary focus point was earnings from JPMorgan Chase and Goldman Sachs, unofficially kicking off the second-quarter earnings season.

JPMorgan beat quarterly estimates on Tuesday as a result of a big-time benefit from better-than-expected loan losses throughout the period, with second-quarter earnings coming to $11.9bn, or $3.78 on a per share basis, exceeding estimates for a print of $3.21, while companywide revenues of $31.4bn also beat the $29.9bn predicted by analysts on the Street but was down from the $33.8bn reported in the same quarter a year earlier.

Moving on to Goldman Sachs, the lender reported net profits of $5.35bn or $15.02 per share for the three months ended 30 June, as strength in its asset management, investment banking and wealth management arms offset weakness in the firm's global markets division.

Also in the corporate space, PepsiCo posted a 20.5% increase in quarterly revenues to $19.22bn, pushing earnings per share to $1.72 each, ahead of expectations for a print of $1.53 per share, driven by returning demand for its products from restaurants and food-service clients.

In other company headlines, Boeing revealed that it had halted production of its 787 Dreamliners as a result of a Federal Aviation Administration evaluation of how the company inspects its planes leading to the detection of a new flaw in the craft.

Elsewhere on the macro front, US small business confidence strengthened in July on the back of improved expectations for the economy. The National Federation of Independent Business' confidence index increased from 99.6 to 102.5, ahead of economists' expectations for a reading of 99.5.

The sub-index for economic expectations saw the biggest rise, jumping by 14 points, reversing the drop seen in June, with expectations for sales and earnings, inventories, hiring plans and employee compensation all rising alongside.

Lastly, the Federal government's budget statement for June came in at -$174.0bn, above forecasts for a reading of $194.0bn.